Anatid Executive Direct Licensing and Market Conduct Division By Delegated Authority from the Superintendent of Financial Services

Transcription

1 Financial Services Commission of Ontario Commission des services financiers de l Ontario Ontario Ontario Corporation number: Co-operative Corporations ACt, R.S.O. 1990, c. C.35 RECEIPT FOR AN OFFERING STATEMENT TREC SOLARSHARE CO-OPERATIVE (NO. 1) INC. TREC SolarShare Co-operative (No.1) Inc. (the Co-operative ), filed an Offering Statement dated May 17, As a condition of the Superintendent of Financial Services issuing a Receipt under Subsection 36(1) of the Co-operative Corporations Act, the Co-operative has undertaken in accordance with Section 18 of the Offering Statement that: a) the Offering Statement dated will expire on May 17, 2019 and after that date no further securities will be issued unless a new Offering Statement has been filed and receipted; b) a copy of the Offering Statement will be given to each prospective investor before payment for securities is accepted by the Co-operative; and c) none of the securities issued by the Co-operative pursuant to this Offering Statement will be in bearer form. A Receipt for the Offering Statement relating to securities to be issued by the Co operative is hereby issued under Subsection 36(1) of the Co-operative Corporations Act. r4 Dated at Toronto, this 3 day of July, Anatid Executive Direct Licensing and Market Conduct Division By Delegated Authority from the Superintendent of Financial Services

2 This offering document contains important information about the Solar Bonds offered for sale by the Co-operative named below. You should read the entire Offering Statement before deciding whether or not to purchase these bonds. All prospective purchasers must receive this Offering Statement before completing their purchase. Offering Statement of TREC SolarShare Co-operative (No. 1) Inc. ( SolarShare ) May 17, 2018 Minimum Aggregate Offering: Nil Maximum Aggregate Offering for Pre-COD Financing: $20,000,000 Maximum Aggregate Offering for Post-COD Financing: $60,148,234 MAXIMUM TOTAL TO BE RAISED UNDER THIS OFFERING STATEMENT: $60,148,234 SolarShare is offering 5 and 15-year Solar Bonds. Prospective individual purchasers of the bonds must first be admitted into membership by the Board of Directors of SolarShare. Corporations and organizations may purchase bonds, but may not be members of SolarShare, in order that SolarShare may continue to qualify for Community Participation Projects, as defined by the Independent Energy Systems Operator (IESO, formerly the Ontario Power Authority). SolarShare is also seeking a loan facility of up to $20,000,000 from Community Power Capital. SolarShare has already borrowed $4,613,341 in construction financing from Community Power Capital and so will seek up to another $15,386,659. In addition to the long-term debt already secured for its projects held by CSA 1 (see Sections 6 and 13), SolarShare has acquired another long-term debt facility for CSA 2. Pre-COD Post-COD Source of Funds CPC Solar Bonds Debt Financing Minimum Offering Nil Nil Nil Maximum Offering $20,000,000 $60,148,234* Nil Minimum Individual n/a $1,000 / $10,000** n/a Purchase * The total amount of Post-COD (Commercial Operation Date) financing will be a combination of 5-Year and 15-Year Solar Bonds plus long-term debt financing, to a maximum combined total of $60,148,234. For example, if all post-cod funds are raised through Solar Bonds, then there will be zero long term debt. The final combination will depend on market conditions, is at the discretion of the Board of Directors, and will not exceed a combined total of $60,148,234. 1

3 ** Each purchaser of five-year Solar Bonds must purchase them in the minimum principal amount of $1, Five-year Solar Bonds are offered at an interest rate of 5 percent per annum. Each purchaser of fifteen-year Solar Bonds must purchase them in the minimum principal amount of $10, Fifteen-year Solar Bonds are offered at an interest rate of 6 percent per annum and are self-amortizing. The securities offered are issued under the Co-operative Corporations Act and are exempt from the requirements of the Securities Act (Ontario). The persons selling these securities are exempt from the registration requirement of the Securities Act (Ontario) and are not required to be licensed by any Government agency. No official of the Government of Ontario has considered the merits of the matters addressed in this Offering Statement. Neither the Financial Services Commission of Ontario nor any other ministry or agency of the Government of Ontario assumes any liability or obligation to anyone who purchases the securities offered under this Offering Statement. There is no established market through which these securities may be sold. Due to the characteristics of these securities and the restrictions on their transfer, no such market is likely to develop. The directors of SolarShare have set the price of the securities offered. The Solar Bonds issued under this offering statement are secured by a mortgage registered on all of the project leases and equipment held by SolarShare, but it is different from a traditional mortgage on appreciating assets. A traditional mortgage is usually applied to appreciating assets such as land, whereas this mortgage is on a lease, with a fixed term, and depreciating assets (the solar generating facility), and so the security for the bondholders will decline over time and may have little or no value at the time the principal on the bonds is redeemed. Since the value of the security declines over time, the cash position of SolarShare becomes more important for the repayment of the principal. Investors should not rely on any information other than what is contained in this Offering Statement. Potential buyers should pay careful attention to all the risk factors noted in this Offering Statement. See Section 7 below for a description of risk factors. The information in any projections or pro forma statements contained in this Offering Statement may vary materially from actual results. This Offering Statement expires on May 17, No further securities may be issued after this date unless a new Offering Statement is filed and receipted. 2

4 TABLE OF CONTENTS 1. GLOSSARY CORPORATE INFORMATION DIRECTORS AND OFFICERS DESCRIPTION OF THE BUSINESS OF SOLARSHARE BACKGROUND MANAGEMENT AND ADMINISTRATION OF SOLARSHARE RESTRICTIONS ABOUT SOLARSHARE BOARD EXPERIENCE MANAGEMENT TEAM SOLARSHARE MEMBERSHIP AUTHORIZATIONS, LICENSES, AND PERMITS ENVIRONMENTAL COMPLIANCE REAL ESTATE INSURANCE USE OF SURPLUS REVIEW OF DOCUMENTS BUSINESS PLAN CO-OPERATIVE OWNERSHIP AND INVESTMENT: SOLARSHARE S COMPETITIVE ADVANTAGE STRUCTURE AND KEY RELATIONSHIPS TECHNOLOGY SALES & MARKETING PLAN QUALIFIED INVESTMENTS FOR REGISTERED ACCOUNTS PROJECT FINANCING PERFORMANCE FINANCIALS USE OF PROCEEDS OF THE OFFERING SOLAR BONDS DEBT FINANCING

5 6.3 CONSTRUCTION FINANCING THE PLAN IF SOLAR BONDS SALES ARE INSUFFICIENT RISK FACTORS DESCRIPTION OF CAPITAL STRUCTURE DESCRIPTION OF SECURITIES OFFERED METHOD OF THE SALE OF SECURITIES DESCRIPTION OF THE MARKET ON WHICH THE SECURITIES MAY BE SOLD MINIMUM AND MAXIMUM AMOUNTS SECURITIES AND OTHER DEBT OBLIGATIONS OF SOLARSHARE MATERIAL LEGAL PROCEEDINGS TO WHICH SOLARSHARE IS A PARTY MATERIAL INTERESTS OF DIRECTORS, OFFICERS, AND EMPLOYEES IN THE OPERATION OF SOLARSHARE IN THE SECURITIES OFFERED HEREIN MATERIAL CONTRACTS FIT CONTRACTS MAINTENANCE CONTRACT EPC AGREEMENTS TRUST AGREEMENT FOR SOLAR BOND HOLDERS CPC LOANS DEBT FINANCING FOR CSA DEBT FINANCING FOR CSA TREC SERVICE AGREEMENT TREC RENEWABLE ENERGY FUND AGREEMENT COMMUNITY WEALTH NON-PROFIT CORPORATION WINTERGREEN AND ECOPERTH GREEN TIMISKAMING CO-OP QUEEN STREET SOLAR CO-OPERATIVE CLAREMONT PROJECT BULLFROG POWER

6 17. DISTRIBUTION OF SURPLUS, PATRONAGE RETURNS AND OTHER DISTRIBUTIONS DESCRIPTION OF ANY OTHER MATERIAL FACTS CERTIFICATE OF DISCLOSURE SCHEDULE A PRO FORMA FINANCIAL STATEMENTS SCHEDULE B TERMS OF TRUST AGREEMENT SCHEDULE C FORM OF 5-YEAR SOLAR BOND (SIMPLE INTEREST) SCHEDULE D FORM OF 15-YEAR SOLAR BOND SCHEDULE E SOLARSHARE BY-LAWS SCHEDULE F SOLARSHARE 2017 AUDITED CONSOLIDATED FINANCIAL STATEMENTS SCHEDULE G CONSENT LETTER FROM THE AUDITOR SCHEDULE H CERTIFICATE OF INCORPORATION SCHEDULE I CERTIFICATE AND ARTICLES OF AMALGAMATION SCHEDULE J TERMS OF RENEWABLE ENERGY FUND AGREEMENT SCHEDULE K BOARD AND COMMITTEES ROLES AND RESPONSIBILITIES SCHEDULE L - SOLARSHARE MEMBERS SCHEDULE M - SOLARSHARE PROJECT DESCRIPTIONS SCHEDULE N - UNAUDITED FINANCIAL STATEMENTS, Q

7 1. GLOSSARY 5-Year Solar Bond refers to bonds with a term of five years issued by SolarShare. 15-Year Solar Bond refers to self-amortizing bonds with a term of fifteen years issued by SolarShare. Act means the Co-operative Corporations Act (Ontario) and the Regulations thereunder. Commercial Operation means, with respect to each Facility, that the Facility is mechanically, electrically, and structurally complete, is generating electricity and is delivering electricity to the electricity grid. Commercial Operation Date or COD means the date on which a Facility achieves Commercial Operation. Community Solar Assets 1 or CSA 1 means the Special Purpose Vehicle, with the legal name Community Solar Assets 1 Limited, that was incorporated to hold some of SolarShare s FIT 1 projects, as described in this offering statement. Community Solar Assets 2 or CSA 2 means the Special Purpose Vehicle that holds some of SolarShare s FIT 2 projects. Community Solar Assets 4 or CSA 4 means the Special Purpose Vehicle that holds some of SolarShare s FIT 3 projects. CPC means a not-for-profit co-operative, with the legal name Community Power Capital Cooperative, Inc established to provide construction (pre-cod) financing to community-owned renewable energy projects, such as SolarShare. Debt Financing means senior debt from a long term commercial debt lender. FIT or MicroFIT means the IESO s Feed-in Tariff program, which provides for 20 years of guaranteed revenues for electricity delivered pursuant to it. Projects of different sizes earn different revenues per kilowatt-hour, all known in advance. GEA means Ontario s Green Energy Act, which is the legislation enacted by the Government of Ontario that created the FIT and MicroFIT programs. IESO means the Independent Electricity System Operator, formerly the Ontario Power Authority. The IESO is a not-for-profit corporate entity established in the Electricity Act, 1998, which is under the jurisdiction of the Ontario Ministry of Energy, and acts as the Province of Ontario s electricity reliability coordinator. PV, which stands for photovoltaic means the technology used for the generation of electricity using photovoltaic solar cells, which convert sunlight directly into electricity. Solar Bonds Refers to 5-Year or 15-Year bonds issued by SolarShare. 6

8 SPV means a special purpose vehicle that is a business corporation, wholly-owned by SolarShare, which owns a group of FIT projects. The use of an SPV is standard practice and facilitates the placement of Debt Financing. SolarShare s SPV s include CSA 1, CSA 2 and CSA 4. TREC means Toronto Renewable Energy Co-operative Inc., a not-for-profit co-operative established to promote renewable energy through its project development, project management and educational activities. TREC Renewable Energy Fund means the fund that TREC maintains as per the terms of the Renewable Energy Fund Agreement between TREC and SolarShare. Turnkey Project Development means a project development and construction service that includes construction management, engineering, procurement, permitting, construction and commissioning of a complete solar PV system. 7

9 2. CORPORATE INFORMATION Name of the Co-operative: Date of Incorporation: TREC SolarShare Co-operative (No. 1) Inc. Ontario Corporation No.: (formerly ) Jan 18, 2010 (subsequent certificate of amalgamation effective January 1, 2015). Head Office Address: 401 Richmond Street West, Suite 240 Auditors: Fiscal Year End: Registrar/Transfer Agent: 3. DIRECTORS AND OFFICERS Toronto, Ontario M5V 3A8 Kriens LaRose LLP Thomas Kriens CPA, CA 37 Main Street Toronto, Ontario M4E 2V5 December 31 st SolarShare will act as its own registrar and transfer agent in respect of the securities offered for sale. The Articles of SolarShare provide that SolarShare shall have a minimum of five and a maximum of twelve directors. The By-Laws permit the directors to set the number of directors. There are currently nine directors, as follows: NAME TITLE OCCUPATION RESIDENCE DIRECTOR SINCE Mike Brigham President, Director Business Owner / Entrepreneur Toronto, ON 2010 Brian Iler Secretary, Director Lawyer Toronto, ON 2010 David Robertson Treasurer, Director Chartered Professional Accountant Toronto, ON 2010 Julie Leach Director Communications Manager Toronto, ON 2015 Alison Goudy Director Entrepreneur / Business Owner Toronto, ON 2016 Richard Sung Director Entrepreneur / Business Owner Toronto, ON 2016 Ambrose Raftis Director Community Economic Development Expert Timiskaming, ON

10 NAME TITLE OCCUPATION RESIDENCE DIRECTOR SINCE Pieter De Koning Director Engineer Toronto, ON 2017 Shama Ahmed Director Corporate Sustainability Toronto, ON DESCRIPTION OF THE BUSINESS OF SOLARSHARE SolarShare seeks to create a community of individuals and organizations who are knowledgeable and supportive of renewable energy, facilitating a faster transition to a low-carbon economy. Established in January 2010, SolarShare was created in order to improve the environment by purchasing, owning and operating solar PV installations in the Province of Ontario. Ontarians, through SolarShare s co-operative model, can now enjoy financial benefits from investing in cooperatively owned commercial-scale solar PV installations. The importance of community ownership of renewable energy assets cannot be overstated. In Germany, for example, close to half of all investment in renewable energy (over $14 billion) has come from individuals, co-ops and communities. This democratization of energy production has been described as one of the key reasons that the people of Germany are willing to pay more for electricity as coal and nuclear generating facilities are closed. By owning their renewable energy assets, citizens are earning more income while also reducing their future energy uncertainty. SolarShare s Abilene project. As of March 31, 2018, SolarShare owns and operates 48 solar PV sites that have reached commercial operation and are generating electricity. Another 2 sites are currently in various stages of project development. In addition, SolarShare continues to seek opportunities to purchase and develop solar projects. 9

11 Since its inception, SolarShare has financed the building of these projects by raising up to $15 million in construction financing; secured $4.2 million (CSA1) in long term debt from Equitable Life Insurance; secured $13 million (CSA2) in long-term debt from CorpFinance International Ltd. and has raised over $36 million in Solar Bonds to refinance the completed projects. The purpose of this Offering Document is to issue Solar Bonds in order to continue to refinance PV projects as they reach their Commercial Operation Date. By purchasing a Solar Bond as described in this Offering Statement, members will earn interest, as described in Section 9, which comes from the sale of renewable energy into the electricity grid. All proceeds of this offering will pay for the development and installation costs of the solar photovoltaic projects and the operations of SolarShare. SolarShare is a non-profit co-operative. Its net earnings, after payment of interest on its loans and the Solar Bonds, may be applied to meet the capital needs of SolarShare and to repay loans, including the Solar Bonds, but may not be distributed to its members. SolarShare s goals and the number of projects to be developed are described in Section 5 Business Plan of this document. 4.1 Background In 2009, the Government of Ontario enacted the Green Energy Act, which authorized incentives for renewable energy projects. Among these incentives are FITs. The GEA was enacted by the Ontario government in pursuit of these policy goals: 1. End the Use of Coal Ontario phased out coal for generating electricity in 2014 because the resulting pollutants are harmful to human health and the CO2 emissions are major contributors to human-induced climate change. Renewable energy offers pollution-free electrical generation to replace coal, but it requires significant new investment. 2. Long-term Fixed Price Contracts to Attract Investment Renewable energy projects require high initial upfront investments and long investment timelines. In order to attract this needed investment to renewable energy projects, the Government of Ontario, through its FIT program, issues 20-year fixed price contracts for renewable energy generation projects. The government has guaranteed that as long as the project generates electricity, it will buy that electricity at a set price for twenty years. The prices are set at different levels depending on the type of technology and the size of the project. 3. Job Creation In order to qualify for a FIT contract (under FIT 1 and 2), renewable energy projects were required to meet domestic content rules. This meant that a minimum level of labour and equipment (as defined by the IESO) for the projects must have come from Ontario. This domestic content rule ensured that as the province invested in renewable energy, it also created Ontario-based manufacturing facilities and jobs. The domestic content rule no longer applies for current FIT contracts. 10

12 4.2 Management and Administration of SolarShare As described in Section 5 Business Plan, the Board of Directors is responsible for the affairs of SolarShare. It provides management oversight and retains all final decision-making authority related to material changes in the annual operating budget, business plan, and asset ownership. It employs a small staff to manage its key operations and engages service providers for administrative and accounting functions. The general terms of the service agreement with TREC are described in Section 16 Material Contracts. It also contracts with a private service provider for maintenance of its projects. Five committees report to the board and may be made up of directors and non-director members. These include Finance & Planning, New Business & Acquisitions, Governance, Marketing & Membership and Audit. More information on the scope of work of the board and committees is provided in Schedule K. 4.3 Restrictions The Articles of Incorporation restrict the business of SolarShare to: 1. generating, within the meaning of the Electricity Act, 1998, electricity produced from one or more sources that are renewable energy sources for the purposes of that Act, and 2. selling, as a generator within the meaning of that Act, electricity it produces from one or more renewable energy sources. This restriction means SolarShare is a renewable energy cooperative as defined in the Act and is therefore exempt from the normal obligation of co-operatives to do at least 50% of their business with its members. 4.4 About SolarShare As of December 31, 2017, SolarShare is the largest renewable energy co-op in Canada in terms of membership and investment. Solar Bonds are some of the few retail products available in the growing impact investing space and as such is often recognized in industry reports, such as MaRS State of the Nation: Impact Investing in Canada and in Toronto Dominion s white paper called The Landscape for Social Impact Investing. 11

13 SolarShare s Midair project. SolarShare also enjoys significant media recognition and has been featured on BNN, and in the Globe and Mail, National Post, CBC, Toronto Star, Postmedia News, NOW Toronto, Corporate Knights, and Money Sense. The value of the organization lies not only in the physical assets owned but also with the over 1,600 members who support and act as ambassadors for the co-op and community power. The growing membership base increasingly participates in volunteer opportunities and seeks deeper involvement with the sector. 4.5 Board Experience The SolarShare Board of Directors provides strong oversight of key decision-making and in some cases are involved in the daily management of SolarShare. The Board of Directors manages SolarShare s interests. They guide the organization s strategy and make decisions on which projects to invest in. The Board of Directors is supported by five committees, which include Director and non-director members. The table below describes the membership of the board and each committee. NAME TITLE OCCUPATION SOLARSHARE ROLE COMMITTEE MEMBERSHIP Mike Brigham President, Director Business Owner Business development, financial analysis Finance & Planning, New Business & Acquisitions, Governance Brian Iler Secretary, Director Lawyer Regulatory strategy and legal compliance David Robertson Treasurer, Director Chartered Professional Accountant Financial controls and compliance Finance & Planning, Audit 12

14 NAME TITLE OCCUPATION SOLARSHARE ROLE COMMITTEE MEMBERSHIP Julie Leach Director Communications Manager Alison Goudy Director Entrepreneur / Business Owner Richard Sung Director Entrepreneur / Business Owner Ambrose Raftis Director Community Economic Development Expert Shama Ahmed Director Corporate Sustainability Governance, communications and marketing Business development, financial analysis Solar industry insight, business development, financial analysis Community engagement, project development Financial Services strategy and engagement Governance, Marketing & Membership Finance & Planning, New Business & Acquisitions, HR New Business & Acquisitions Governance, HR Pieter De Koning Director Engineer Business strategy, Technical analysis Marketing & Membership Doug Finley Committee Member Software Executive Marketing Marketing & Membership Patrick Tomlinson Committee Member Public Servant First Nation relations Finance & Planning, New Business & Acquisitions Thomas Haubenreisser Committee Member Retired Banking executive Financing strategy Governance, Audit, Finance & Planning, Marketing & Membership Jen Aitchison Committee Member Sr. VP, Sustainable Energy Insurance Insurance and human resources HR 13

15 4.6 Management Team In addition to the expertise on the Board of Directors, SolarShare is managed by an experienced team that ensures quality control, effective project delivery, evaluation, and fiscal accountability. Mike Brigham, President, also plays a strong management role in the daily activities of SolarShare. With over 25 years of experience in solar PV technology and having active roles in the Green Energy Act Alliance and the Canadian Solar Industries Association, Mike leverages his considerable project and technical experience with his industry involvement to best represent the interests of SolarShare and its members. Chris Caners, General Manager, is a professional engineer with more than a decade of experience in energy and environmental management, research and analysis, including climate, energy efficiency and renewable energy. Chris manages the daily affairs of SolarShare. Chris is away on Paternity Leave from January, 2018 and will return in October, Rob Grand, interim General Manager, is an experienced entrepreneur and business manager with expertise creating, developing, and consulting with successful businesses, social enterprises, and non-profits in the Environmental and Health & Wellness sectors. Rob has served as a Director and Advisor to more than a dozen organizations including the TD Friends of the Environment Foundation, Green Enterprise Toronto, The Coalition for a Green Economy, and the LFP Foundation. Jennifer Bryan, the Community Investment and Marketing Manager has over 12 years of experience in non-profit sales & marketing management. Jennifer has directed investor relations and outreach activities for the sale of SolarShare s Solar Bonds for close to two years, during which time sales have grown by more than 16 M. Jennifer is currently away on maternity leave and will return to SolarShare in February, Joel Longland, interim Community Investment and Marketing Manager, has worked in the corporate sustainability sector fundraising for not-for-profit organizations and leading sustainability programs for national companies. Joel holds a BBA in Marketing, an MBA in Sustainable Business, and serves on the Board of Directors for the charity Charlie's FreeWheels. 14

16 SolarShare s Abbey Dawn project. Meghan MacLennan, the Project Coordinator, supports the development, construction and purchase of SolarShare's projects, and has been active in the community power sector since Prior to joining SolarShare, Meghan worked for the Ontario Sustainable Energy Association and the Community Power Fund where she supported the development of community-based renewable energy projects in Ontario. Bob Ross, Operations and Maintenance Coordinator, has managed over 300 solar projects throughout North America utilizing his skills in design, evaluations, engineering, installation, commissioning and monitoring. He enjoys sharing his knowledge through teaching in the Renewable Energy Techniques program at Conestoga College. Prior to joining SolarShare, Bob was a Project Manager at Efston Science (esolar) and Operations Manager at Solar Ontario. He managed his own building contracting company for 25 years. The management team is supported by TREC staff and resources. 4.7 SolarShare Membership Membership in SolarShare is open to all natural persons who are residents of Ontario. Members are required to pay a one-time membership fee of $40.00, as approved by the SolarShare Board on October 16, As at March 31, 2017, SolarShare s bondholders had over $36 million invested in Solar Bonds. Members are entitled to one vote at co-operative member meetings regardless of the amount of bonds they have purchased. Membership in SolarShare shall not be transferable unless authorized by the Board of Directors and will be subject to a $50 administration fee. Membership in SolarShare shall terminate upon the withdrawal of the Member from SolarShare, on the death of the Member, when the Member ceases to be a resident of Ontario, or on the termination of the Member s membership by SolarShare. 15

17 The members of SolarShare have a right under the Act to receive the financial statements and the auditor s report annually at least 10 days before each annual meeting of members. More about the members of SolarShare is available in Schedule L. 4.8 Authorizations, Licenses, and Permits SolarShare holds all authorizations, licenses and/or permits that are required to complete its project portfolios, including the following: A structural engineering study for rooftop installations to ensure that the building can accommodate the intended system; A FIT contract from the IESO to purchase electricity produced at the site for approximately 20 years at a fixed rate, which depends on the size of the project; Permission from the local distribution company to connect the solar installation to the electricity grid; Certificate of Inspection and Authorization to Connect from the Electrical Safety Authority confirming the safety of the installation; Municipal building permit confirming the project conforms with the local building code. SolarShare members, board members and staff celebrate a new project. 4.9 Environmental Compliance In accordance with Ontario Regulation 359/09 under the Environmental Protection Act, renewable energy facilities generating less than 10 kwh and all rooftop PV systems are exempt from 16

18 obtaining a Renewable Energy Approval (REA) from the Ministry of the Environment. All of SolarShare's rooftop projects covered by this Offering Statement are therefore exempt from the REA. As of November 18, 2012, certain small ground-mounted solar facilities must register in the Environmental Activity and Sector Registry (EASR), as per O. Reg. 350/12 under the Environmental Protection Act. The EASR applies to ground mounted solar projects with a nameplate capacity between 10 kw and 500 kw. Some of the projects covered by the Offering Statement therefore require registrations under the EASR. The EASR sets out criteria that must be met in order for a facility to be registered. If a facility cannot meet these criteria, it may require a full REA or Environmental Compliance Approval (ECA). The criteria include restrictions on zoning, length of off-property distribution lines, compliance with the Niagara Escarpment Planning and Development Act, noise and proximity to water bodies and archaeological sites, etc. SolarShare will be required to ensure that the information for each project registered under the EASR remains up to date and that the project continues to meet the requirements of O. Reg. 350/12 throughout its operating life Real Estate SolarShare does not own any real estate, save for leasehold interest in properties on which its projects are located. SolarShare has entered into lease agreements with property owners to host its projects. See Section 15 Material Contracts for a summary of existing lease agreements Insurance SolarShare carries appropriate insurance for its operations, including: construction, directors and officers liability, errors and omissions insurance, general liability, business interruption, and property insurance on all project assets. Coverage includes: all risks of direct physical loss or damage or damage outside of policy exclusions including flood, earthquake and equipment breakdown, commercial general liability insurance and directors & officers liability including employment practices liability Use of Surplus Any surpluses generated by SolarShare s projects (after sufficient funds, in the opinion of the Board of Directors, are retained to meet SolarShare s obligations, including Solar Bonds) are assigned to the TREC Renewable Energy Fund, which will invest in more community power projects. It is important to note that SolarShare intends to only contribute surpluses to the TREC Renewable Energy Fund and Community Wealth Non-Profit Corporation (as explained in sections 16.9 and respectively) after it maintains sufficient funds of its own to meet its obligations, and so any bondholders should concern themselves solely with SolarShare s ability to honour its obligations. The TREC Renewable Energy Fund is comprised of the money received from SolarShare and other co-operatives pursuant to similar arrangements. In return, TREC will be entitled to security 17

19 for the performance of SolarShare s obligations held pursuant to the Trust Agreement, subordinated to SolarShare s bondholders and long term debt. The TREC Board of Directors and membership are comprised of individuals who have championed the community-based renewable energy sector. TREC will also apply the surpluses generated by projects to finance its incubated co-operatives renewable energy projects. Surpluses are defined as the proceeds from a project net of operating costs including: insurance, maintenance, rooftop leasing, administration, debt financing and interest and principal payments on Solar Bonds and operating reserves. While there is an obligation to assign any surpluses to the TREC Renewable Energy Fund, SolarShare has full discretion to keep sufficient funds to meets its financial obligations, which include interest payments on the bonds and principal repayment of the bonds on their maturity Review of Documents All agreements related to this Offering Statement, including the Articles of Incorporation and By- Laws of SolarShare, Leases, and TREC Service Agreements, may be reviewed by any member at the SolarShare office upon request. 5. BUSINESS PLAN The purpose of this Offering Statement is to raise funds, by selling Solar Bonds, for SolarShare s solar PV projects that are used to refinance PV projects that have reached COD. Please see Section 6 Use of Proceeds for the specific list of projects. SolarShare s business plan is based on the value proposition of providing Ontarians with triple-bottom line benefits on their investments: a financial return, environmentally-friendly clean energy, and local community power and job creation. SolarShare plans to spend the next few years building and acquiring projects in order to grow the co-op and continue to reduce greenhouse gas emissions on behalf its members. As such, the financial plan for the co-op is one of significant financial outlays in the first years of development and investment, as seen in the co-op s audited financial statements in Schedule F, followed by a long stream of cash flows into the future, as shown in the pro forma financial statements in Schedule A. The business model for a solar PV installation is straightforward. Revenues are reasonably predictable given the FIT contract that pays a set price per kwh for 20 years and the data supplied by solar irradiance software tools such as PVSyst that estimates average solar irradiance information using detailed project specific information. Solar panel manufacturers typically provide a minimum guaranteed performance warranty for their products. Performance degradation of the products is well understood and is factored into revenue projections. Maintenance costs are also reasonably predictable as are insurance and administration costs. Since the feedstock (sunlight) is free, aside from weather variability, there are no fluctuating supply variables making this a significantly simpler business than most to model with reasonable accuracy. The biggest potential variable is the cost of financing. 18

20 After the costs of leasing the project sites, paying insurance, maintenance, administration and CPC and debt financing costs, SolarShare will expect a return of 7-8% of its invested capital from which it will pay interest and principal on the Solar Bonds in accordance with their terms. Any surplus will be assigned to TREC s Renewable Energy Fund, which will be used to help TREC s incubated co-operatives develop additional renewable energy projects; however, no surplus is expected to accrue to this fund until after 20 th year of the co-op. 5.1 Co-operative Ownership and Investment: SolarShare s Competitive Advantage There are many private companies competing for rooftops and land space in Ontario. However, they employ the traditional model of private finance, whereas SolarShare s value proposition and competitive advantage comes from community investment and the use of the co-op model. There are two strategic advantages to this approach: The FIT rules give priority to community-owned FIT projects. Landlords benefit from SolarShare branding through grassroots community engagement. 5.2 Structure and Key Relationships SolarShare s 80 Van Kirk project. SolarShare owns its projects directly and through three Special Purpose Vehicle corporations (SPVs). SolarShare receives construction financing from Community Power Capital (CPC) to construct or acquire projects and then repays the construction financing with a combination of Solar Bonds and Debt Financing. All of these relationships are shown and described in the diagram and table below. More information on each project and its location in the corporate structure is provided in Schedule M. 19

21 SOLARSHARE CORPORATE STRUCTURE April 30, SunField MicroFIT 17 Projects SunField SunField MicroFIT SunField MicroFIT Projects MicroFIT Projects Projects ASSET SECURITY PRIORITY SolarShare SPV First Bondholders Debt Finance Second Construction Investors Bondholders Third Construction Investors Construction Investors have the option to buy out Bondholders at any time in return for placing their security last in line. The Trustee holds security on all SolarShare or SPV owned assets on behalf of Bondholders and Construction investors. Individuals LEGEND Non share capital not for profit co-operative corporation incorporated under Ontario Co-operative Corporations Act Share capital not for profit corporation incorporated under Ontario Business Corporations Act Directly owned solar projects 20

22 ORGANIZATION SolarShare Community Solar Assets 1 (CSA 1) Community Solar Assets 2 (CSA 2) Community Solar Assets 4 (CSA 4) Community Power Capital Cooperative DESCRIPTION The parent co-operative that owns some of the PV projects outright and also owns others through its wholly-owned subsidiaries, CSA 1, CSA 2 and CSA 4. SolarShare has members that purchase Solar Bonds which are repaid from the revenues from all of the projects. An SPV that holds FIT 1 solar projects. SolarShare wholly owns the SPV. The FIT 1 projects that are owned by CSA 1 are Champion, Goodmark, Michael St, Ontario St, Abilene and Vanastra. The long-term debt facility from a mid-sized insurance company is secured by these CSA 1 projects only. The projects held directly by SolarShare and those within CSA 2 are not included in the security for the loan. An SPV that holds FIT 2 and FIT 3 solar projects. SolarShare wholly owns the SPV. CSA 2 owns the following projects: Abeline, Basaltic, Orenda, 80 Van Kirk, Holtby, Keele, Midair, Stronach and Summerville. An SPV that holds FIT 3 solar projects. SolarShare wholly owns the SPV. CSA 4 owns the following projects: Sundance 1-8, Abbey Dawn, Lovell and Kaladar. CPC is a not-for-profit co-op that lends construction (bridge) financing to renewable energy co-ops in Ontario. Its membership is comprised of individuals and organizations who support the goals of SolarShare and other renewable energy co-ops and have loaned money to it for that purpose. Its pre-cod financing is then repaid with a combination of Solar Bonds and Debt Financing once a project has reached COD. 5.3 Technology The major components of any solar PV system are the solar PV modules, the inverters and the racking. The PV modules and the inverter are the most expensive and in order to lower the risks associated with any of its projects, SolarShare regularly reviews solar technologies, and will employ only those that are considered to be quality products from reputable companies offering effective warranties that will endure for the life of the equipment. For instance, early in 2016, SolarShare hired the consulting firm Luminate to provide a comprehensive report and opinion regarding the quality of the new, Canadian designed, Morgan Solar Savanna TM dual axis tracking system which has now been deployed across a number of projects. 21

23 Many of SolarShare s projects also undergo a rigorous third party due diligence assessment as a component of Debt Financing. All CSA 1 and CSA 2 projects have been evaluated by independent engineers who have conducted site visits and carefully reviewed the installed equipment, as well as SolarShare s contracts, financial models and regulatory requirements. These reviews are used to by Debt Finance lenders to assess the quality of SolarShare s solar PV projects. SolarShare is committed to transparency in reporting on performance. All of SolarShare s projects have live monitoring of electricity generation, many sites can be viewed online via the SolarShare website (solarbonds.ca). Members can see how the systems are performing and can access a variety of other data, along with educational information about solar electricity. SolarShare monitors the systems daily in order to respond quickly to any disruptions in performance. In the case of a disruption, SolarShare has a contract with a maintenance service provider (Northwind Solutions), which conducts both emergency repairs and regularly scheduled maintenance on all projects except for Sunfields. Further details can be found in section 16 Material Contracts below. The emergency and regular maintenance of Sunfields, SolarShare s 17 ground mounted microfit projects, is by contract to Penguin Power. 5.4 Sales & Marketing Plan SolarShare s Marketing Plan includes: 1. Digital Presence & Media The SolarShare website is the first contact point with potential and current members, and contains all information required to make a decision about joining the co-op, and the receipted Offering Statement, which enables potential members to make a decision about investing in SolarShare. Solar Bonds can now be purchased directly through the SolarShare online platform. Visitors to the website are directed there through digital advertising on the google network and social media. SolarShare has a strong database of members and potential investors who receive regular updates via Community engagement Staff and volunteers attend many tradeshows, markets and ecofairs throughout Ontario to meet existing members and inform the public about SolarShare and the investment opportunity. SolarShare celebrates new projects by inviting the public to tour the systems and learn more about the co-op. 3. Advertising SolarShare attracts members from throughout Ontario by utilizing transit advertising, print and earned media. Further details of SolarShare s Sales & Marketing Plan are not shown or described in detail in this Offering Statement for confidential competitive reasons. 5.5 Qualified Investments for Registered Accounts Part of SolarShare s mission is to offer accessible renewable energy investment opportunities to its members, many of whom only invest through their Registered Retirement Savings Plans (RRSPs), 22

24 Tax-Free Savings Accounts (TFSAs) or other registered investments. As such, SolarShare has commissioned and obtained a third-party tax opinion that Solar Bonds are qualified investments under Regulation 4900(1)(j) of the Income Tax Act. Regulation 4900(1)(j) of the Income Tax Act states that qualified investments include: a debt obligation of a debtor, or an interest, or for civil law a right, in that debt obligation, where: the debt obligation is fully secured by a mortgage, charge, hypothec or similar instrument in respect of real or immovable property situated in Canada, or would be fully secured were it not for a decline in the fair market value of the property after the debt obligation was issued, and the debtor (and any partnership that does not deal at arm s length with the debtor) is not a connected person under the governing plan of the plan trust; As confirmed by the external opinion and the underlying valuation of the property on the mortgages are registered against, Solar Bonds meet the first test of being a debt instrument that is fully secured by a charge on real property in Canada, and they meet the second test that the debtor is not a connected person. SolarShare anticipates confirming its valuation as reasonably required in order to ensure the bonds are secured as described in the tax opinion. A copy of the tax opinion and associated documentation is available to any member interested in purchasing bonds for their registered account, such as an RRSP or TSFA. Fifteen-year Solar Bonds are eligible to be held in RRIFs. SolarShare works with a number of investment institutions and advisors to facilitate the ability of members to hold Solar Bonds in their registered accounts. Even with the external tax opinion, investment advisors and/or institutions may not allow our members to hold Solar Bonds in their registered accounts. Members should speak with their investment advisors about this. 5.6 Project Financing Construction Financing SolarShare s business model uses construction (bridge) financing from CPC to construct its projects. Please see Section 16 Material Contracts for details on the loan agreement with CPC. Re-Financing Once a project reaches COD, it is then refinanced using a combination of Solar Bonds and Debt Financing. In addition to what has previously been raised under prior Offering Statements, SolarShare will sell Solar Bonds up to the maximum stated in this Offering Statement. Arrangements have been made for Debt Financing for CSA 2. 23

25 SolarShare is not planning to seek further Debt Finance for its projects held directly by the co-op and will instead issue Solar Bonds. In select cases where SolarShare has partnered with a project landlord, SolarShare may enter into private loans with a landlord on similar terms to existing Debt Finance. 5.7 Performance Since its inception in January 2010, SolarShare has achieved significant growth, as illustrated through outstanding Solar Bonds and membership in the figure below. 5.8 Financials SolarShare has prepared financial projections for the next 20 years of its operations: see Schedule A. These projections are based upon assumptions that the Board of Directors believe to be reasonable and which are consistent with similar systems operating elsewhere. Actual results will vary, perhaps materially, from these projections. Some or many of the assumptions may change on account of circumstances beyond the control of SolarShare. A comprehensive statement of these risk factors is set out in Section 7 of this Offering Statement. 24

26 a. Consolidated Pro Forma Financial Statements Pro forma consolidated financial statements have been prepared that include all the projects, grouped into four portfolios: (1) owned outright by the co-op, (2) owned by CSA 1, (3) owned by CSA 2, and (4) owned by CSA 4. The pro forma financial statements can be found in Schedule A. b. Income Projections SolarShare has prepared income projections, set out in the pro forma financial statements for the expected life of the projects that are covered by this Offering Statement. All forecasts are prepared in accordance with generally accepted accounting principles. SolarShare s revenues from projects are based on estimates of system efficiency and solar radiation at each specific site. SolarShare has endeavoured to use conservative estimates when modeling the financial performance of the projects. These estimates are based on a variety of meteorological data sources and industry standard software. These forecasts represent SolarShare s best efforts to estimate accurately and conservatively. The revenues are expected to decline due to panel degradation. There is a routine amount of degradation that takes place of up to 0.7% per year in the most sun-intensive climates. There is also a very rapid form of degradation that takes place during the first few days that a solar module exposed to the sun; called "light-induced degradation" that is approximately 1.5% to 2%. In order to assure customer's concerns about the amount of degradation that will be experienced, solar module manufacturers all offer performance warranties that stipulate that their modules will produce at least 90% of their rated capacity in year 10 and 80% of their capacity in either year 20 or 25 (depending on the manufacturer). SolarShare's pro forma financial statement take degradation into account, and as of July 2013 the co-op s planning became even more conservative, with the rates of degradation being increased to 2% in year 1, then 0.6% additionally every year thereafter. Revenue projections depend primarily on the price paid for the electricity and the amount of electricity produced. The model is ultimately dependent upon the amount of sunshine that reaches the solar panels - something that will vary from year to year and, though it can be estimated, it cannot be guaranteed. 25

27 SolarShare s Holtby project. The pro forma financial statements project, Operating and Admin Expenses which include: ongoing operations, maintenance and monitoring, system insurance, utility account fees, and an allowance for one replacement of all inverters, although it is more likely that repairs only will be required. Co-op Expenses are the marketing costs associated with acquiring new members and attracting investment, plus the annual expenses associated with obtaining financing, administering the co-op and managing its members. At the end of a project s 20-year term, the solar panels will have been entirely depreciated. If there is no remaining value in the panels, the net assets of SolarShare will have been entirely eroded and SolarShare will have no residual assets. c. Taxation As SolarShare is a non-profit co-operative, it is the opinion of SolarShare that no income taxes are payable by it. However, in the event that SolarShare is obliged to pay income tax, payment would be from surplus otherwise payable to the TREC Renewable Energy Fund, and the impact on SolarShare s ability to pay interest and principal on the Solar Bonds would be minimal. SolarShare is a registrant for Harmonized Sales Tax purposes, and the impact of HST on its finances will therefore be neutral. d. Capital Costs The following table sets out the total estimated capital costs associated with the projects in SolarShare and each SPV: 26

28 TOTAL COST OF PROJECTS AT AQCQUISITION SolarShare Directly Owned** $7,663,400 Community Solar Assets 1 $6,370,500 Community Solar Assets 2 $18,832,500 Community Solar Assets 4* $24,142,879 TOTAL $57,009,279 e. Financial Assumptions *Estimate due to projects that are not yet acquired by SolarShare. **Based on SolarShare s financial interest in the joint venture. The pro forma financial projections have been prepared using generally accepted accounting principles for not-for-profit organizations as described in Part III of the CPA Canada Handbook. The following financial assumptions were used: 1. Revenues Revenue estimates are based on analyses from sophisticated output modeling software, but with reductions from these estimates used in order to be conservative. 2. Revenue Inflation Revenue from sale of power under the fixed price contract with no escalation clause. 3. Expense Inflation Expense are assumed to increase annually by an inflation factor of 2.5%. 4. Interest Rates: a. CSA 1 Debt Financing long term commercial debt financing for CSA 1 has been secured for a term of 16 years from February 20, 2015, at a 4.789% interest rate. b. CSA 2 Debt Financing long term commercial debt financing for CSA2 has been secured for a term of 15 years from September 6, 2017, at a 5.262% interest rate. c. Solar Bonds The Solar Bond interest expense is assumed to accrue at the rate associated with the bond terms. Solar Bonds are issued for terms of five years earning 5% annual interest or fifteen years earning 6% annual interest. Five-year Solar Bonds can earn either simple or compound interest, depending on the investors choice. Any combination of simple and compounded bonds issued from this offering will not materially affect the cash position of SolarShare. 27

29 5. 5-Year Solar Bond renewal interest rates The 5-Year Solar Bond interest expense is being modeled under the assumption that approximately 30% of capital expenditures will be financed with 5-Year Solar Bonds and will renew at 5, 10 and 15 years out. SolarShare carefully monitors interest rates and their potential impact on financing activities on an ongoing basis. Interest rates for these renewals are assumed to be according to market conditions and have been assumed to be: Years 1-5 = 5.0% Years 6-10 = 5.0% Years = 6.0% Year Solar Bond Under this offering, SolarShare will offer 15-year self-amortizing Solar Bonds that earn 6%. The more 15-Year Solar Bonds issued, the less SolarShare needs to access Debt Finance. 7. Construction financing CPC has provided capital to finance the construction and acquisition of generation projects. The construction capital is repaid partly when the co-operative obtains Debt Financing on projects and the balance by capital raised through the sale of the Solar Bonds. Presently, the note holders earn 10% interest per year on project construction financing and 6% after COD until the project is refinanced with a combination of Debt Financing and Solar Bonds. 8. Excess funds on hand To be conservative, no amounts are included for any interest earned from cash-on-hand for temporary periods. 9. Early Repayments SolarShare has the right to repay Solar Bonds before their maturity date. If the co-op is no longer growing and begins to accumulate too much cash from the sale of electricity, or as the value of the solar assets decline, then the coop will reduce its interest expense and its liabilities by buying back Solar Bonds. This is not planned during the initial years of operation when SolarShare is still developing and acquiring projects, but to be conservative for this offering, the financial model assumes that SolarShare will cease developing new projects in 2018 and will begin to repay the principal on a percentage of outstanding Solar Bonds each year thereafter. 10. Solar Bond renewals At the end of the term of the Solar Bonds, renewal may be an option for bondholders (15-Year Solar Bonds are self-amortizing; paid back over the life of the bond). Renewal interest rates will be set according to market conditions (see assumptions above). 11. Debt Financing SolarShare has refinanced a portion of each project using long-term financing from institutional lenders and its own 15-year bonds. The pro forma financial statements assume that the cost of capital is similar between all three sources of debt at approximately 5.25%. 12. Accounts receivable and accounts payable Both accounts receivable and payable are expected to be at approximately the same levels as the first year. As such, they 28

30 remain unchanged until the end of the projects at which they are assumed to be zero. 13. Decommissioning There is no provision for decommissioning costs for any location. Solar PV systems have a life far greater than the 20-year FIT contracts and there are compelling arguments that these systems will be operable on a profitable basis from the 21 st year onward. However, no income has been forecast beyond the 20-year FIT contracts. 14. Equipment replacement Some equipment replacement, such as inverters will take place during the life of the project. The financial projections include projected expenses for such replacements. 15. Solar panel performance degradation Solar panels gradually wear out over time so that less power is generated each year. SolarShare s financial pro formas take this into consideration. 16. Lease rents Almost all the projects under contract have a fixed roof or land lease rate. For those few projects where the lease rates are being finalized, the rents have been predicted based on current leases in the portfolio. 17. Operations and maintenance Expenses from operations and maintenance are calculated on a per project basis, based largely on system size and location. 18. Co-op management It is assumed that management of the co-op will be done under contract, which is renewed annually. Cost estimates for the life of the projects are based on this contract. Inflation is not added in anticipation that the per-member unit costs will decrease as membership in the co-op increases. 19. TREC Renewable Energy Fund Payments to the Renewable Energy Fund Agreement will be made in accordance with the terms of the agreement. See Schedule J. 20. Taxation SolarShare in a non-share capital co-operative incorporated for nonprofit purposes. SolarShare claims an exemption from income tax under section 149(1)(l) of the Income Tax Act, and so it is assumed that no income tax will be payable. 6. USE OF PROCEEDS OF THE OFFERING Minimum Aggregate Offering: Nil Maximum Aggregate Offering: Pre-COD Construction Financing: $20,000,000 Post-COD Refinancing: $60,148,234 Maximum Aggregate Offering: $60,148,234 29

31 SolarShare has arranged construction financing from Community Power Capital in order to construct its projects. The terms of the construction financing are disclosed in Section 13 Securities and Other Debt Obligations of SolarShare and in Section 0 Material Contracts. Once projects reach COD, they are refinanced with a combination of Debt Financing and Solar Bonds. The following table shows the amount of refinancing required post-cod. PROJECT CAPITAL EXPENDITURES & FUNDS NEEDED SolarShare $ SunFields 1,925,700 Waterview 2,282,800 Panjetan 695,700 Earlton 674,500 Joint Venture (111 & 153 Van Kirk) 2,084,700 Subtotal 7,663,400 CSA 1 Ontario 799,800 Goodmark 705,400 Michael 985,900 Champion 1,554,100 Vanastra 2,325,300 Subtotal 6,370,500 30

32 PROJECT CAPITAL EXPENDITURES & FUNDS NEEDED CSA 2 Summerville 1,238, Van Kirk 2,917,900 Holtby 2,552,300 Midair 3,422,400 Keele 1,682,900 Basaltic 1,212,200 Orenda 1,285,100 Stronach 1,362,400 Abeline 3,158,700 Subtotal 18,832,500 CSA 4 GT - CH02 2,238,827 GT - CH03 2,289,658 GT - CH04 2,324,264 GT - CH07 2,349,960 GT - CH08 2,294,942 GT - CH09 2,297,813 GT - CH013 2,303,404 GT - CH014 2,303,108 Kaladar 1,105,492 Abbey Dawn 2,365,183 31

33 PROJECT CAPITAL EXPENDITURES & FUNDS NEEDED Lovell 2.270,228 Subtotal 24,142,879 Total CAPEX $57,009,279 Existing Projects 57,009,279 Anticipated New Projects and Aquisitions 20,000,000 Total Capex 77,009,279 Debt Finance raised for CSA 1, net of due diligence costs -4,200,000 CSA 1 Debt Finance due diligence and legal costs 227,574 Debt Finance raised for CSA 2, net of due diligence and legal costs -13,194,000 CSA 2 Debt Finance due diligence costs 305,381 Total Solar Bonds Required to Finance $60,148,234 Bonds outstanding as of Apr 30, ,729,997 Estimated Bond Renewals minus Bonds due to expire -534,750 New Bond Sales under this offering 24,952,987 Maximum Aggregate Offering for Post-COD Financing $60,148, Solar Bonds SolarShare is seeking to raise up to $60,148,234 in Solar Bonds. The funds raised will be used to purchase existing projects and to repay construction financing on potential new projects. The exact ratio of Debt Financing to Solar Bonds may change depending on the final terms of the long term commercial debt lenders and on SolarShare s success at selling its Solar Bonds to new and existing members. 32

34 6.2 Debt Financing SolarShare does not anticipate seeking any further long term commercial debt during the term of this Offering Statement. 6.3 Construction Financing SolarShare uses construction (bridge) capital to construct its projects and as a source of working capital. The amount of construction financing varies depending on the terms of each deal and terms of the related suppliers. Based on past experience and concurrent negotiations with panel suppliers, SolarShare will require construction capital of approximately one third of its total capital needs. This will be secured from CPC, as discussed in Section The Plan if Solar Bonds Sales are Insufficient The construction capital discussed in the previous section is used for both construction financing and as a placeholder until the projects can be refinanced. If for any reason there are insufficient Solar Bonds raised to repay the construction capital before this offering expires, then the construction capital will remain in place until sufficient funds can be raised to replace it under a new Offering Statement. These funds can be raised by taking on additional senior debt (6.2). There will be sufficient asset value to support borrowing to repay the construction capital loan. 7. RISK FACTORS Solar Bonds are intended to be low-risk investments, however, there are still risks, as described in this section. The risks are listed below in alphabetical order. SolarShare will be subject to a number of risks common to start-up ventures in general as well as specific risks associated with electricity generation and solar PV technology. Risks associated with development and construction of SolarShare s projects are borne by the construction capital lenders and not by SolarShare. SolarShare s bond holder s risks arise from operational factors, as set out below. The failure to prevent, minimize or mitigate any of the following risks could jeopardize investor s financial returns and possibly their investment in SolarShare: 1. Cash Flow: SolarShare anticipates positive cash flow over the life of its projects. However, these projections are based on a number of assumptions. If any one or more of these assumptions turns out to be significantly in error then SolarShare will be unable to manage its cash flow requirements. This could jeopardize the viability of the operation of each project and/or its expected returns. 2. Currency Risk: Solar PV project components are often imported and are paid in a foreign currency, therefore changes to the value of the Canadian dollar could potentially have a material impact and adverse effect on the cost of future projects or on the component costs for maintenance and replacement. 3. Depreciation of Assets: Investors are advised that the Board of Directors is not establishing 33

35 any reserve for the replacement of equipment, other than inverters and ordinary maintenance items and is depreciating the value of the system to zero at the end of its 20th year of operation. Solar PV systems have long operating life spans, however, and it is anticipated that in its 21st year of operation and for some time beyond, a SolarShare project will produce between 80% and 90% of its initial rated output and thus be producing energy outputs with some value. Since the value of this production cannot be determined today, no value has been assigned to it. 4. Equipment Failure: The equipment SolarShare has installed, and intends to install, is expected to be low maintenance and reasonably trouble-free, with the exception of the power inverters, which are planned to be replaced in SolarShare s business plan. The solar panels are covered by warranty for a minimum of twenty years. However, should issues with the solar panels and/or inverters develop, there could be a loss of energy production and associated revenues for the period of time a failure occurs. This loss may not be covered by warranty or insurance. 5. Financial Projections: This Offering Statement contains forward-looking statements and projections that involve numerous assumptions, hypotheses, risks and uncertainties including, among others, those set out in this Section as Risk Factors. These projections are based upon assumptions and hypotheses that the Board of Directors believes to be reasonable and which are consistent with the forecasts and projections prepared by SolarShare. No representations or warranties are given that these projections will actually be achieved. Actual results will vary, perhaps in a materially negative way, from these forecasts and projections. The assumptions upon which these forecasts and projections are based may change, whether due to circumstances beyond the control of SolarShare or otherwise. Investors are advised not to rely solely upon these projections in making their investment decision. 6. Failure to Raise Sufficient Capital: There are no assurances that SolarShare will be able to raise sufficient capital, either through Debt Financing and/or from the proceeds of this and future offerings, to meet the financial requirements to operate the projects contemplated in the business plan or that the terms and conditions of that financing will not change in a significantly negative way. 7. Income Tax Risk: In Canada, income tax exemption for a non-profit organization is obtained by structuring and operating the organization in accordance with the requirements of the Income Tax Act but may be challenged if the requirements for that exemption, as interpreted by Canada Revenue Agency and/or the courts, are not complied with. 8. Interest Rate Fluctuation: If prevailing market interest rates rise significantly, raising capital to repay the Solar Bonds as they fall due through the sale of new Solar Bonds, may prove difficult. In that event, Solar Bonds may not be repaid in full or when due. Repayment will be subject to the availability of replacement funds provided by new members and surpluses from the projects, and the amounts available for such purpose in TREC s Renewable Energy Fund. This risk diminishes over time as cash surpluses build up over the years. 9. Long-Term Investment: Solar Bonds should be considered long-term investments and may not be suitable for investors who may desire or need a more liquid investment. This 34

36 investment is for a term of either five or fifteen years. 10. Major Contracts: SolarShare has entered into contracts with others to operate its business. Non-compliance by its contractors and the availability of remedies in the case of default could materially affect SolarShare's financial projections. 11. Market for Securities: There is currently no market for the Solar Bonds offered and the development of such a market cannot be assumed. No membership may be transferred without the express consent of the Board of Directors. Management will use its best efforts to match buyers and sellers, but no guarantee is offered that holders of the Securities will be able to sell them. 12. Operations and Maintenance The ongoing maintenance of the installations is critical for achieving SolarShare s estimated production numbers and financial projections. While SolarShare has endeavoured to budget adequately for all operations and maintenance expenses, equipment replacement expenses and contingency fees, unforeseen events could cause these expenses to exceed the estimates. 13. Performance Risk: In the event that any of the solar PV installations do not generate the anticipated amount of electricity due to insufficient sunlight, underperformance of the systems or other causes beyond the control of SolarShare, projected revenues could be adversely affected. The financial projections are significantly dependent on the quality of the solar projections for each system site. There is no assurance that the solar panels, when placed in the same general locale as the data utilized to predict solar intensity, will experience the same solar intensity. 14. Priority of Lenders: The Solar Bonds will be subordinate to Debt Financing lenders but have priority over loans payable to construction lenders. In event of a default or bankruptcy, Debt Financing lenders have a priority with respect to payment of interest and principal. 15. Profitability and Solvency - There is no certainty that SolarShare will be profitable and that SolarShare will be able to pay interest or redeem its Solar Bonds. In addition, there can be no guarantee SolarShare will be able to meet the solvency tests mandated by the Act when a request is made by a member to redeem their Solar Bonds or when membership ceases. As such, there can be no assurance SolarShare will be able to redeem Solar Bonds when so requested or when membership ceases. 16. Property Taxes: The Ontario Government has declared that there will be no property tax payable on rooftop solar PV systems or ground mount systems that are smaller than 10kW. This may change in the future and such unforeseen taxes could adversely affect SolarShare s financial projections. 17. Repayment of Bonds: There is no assurance that SolarShare will be able to repay any of the Solar Bonds offered under this Offering Statement. Investors who require guaranteed returns from their investments with no risk should not purchase Solar Bonds. 18. Roof-top Destruction: In some of SolarShare s leases, should the building under a SolarShare rooftop installation be so significantly damaged by fire or other casualty that its owner 35

37 decides to demolish it, rather than rebuild, the lease for that rooftop may be terminated. SolarShare s insurance would replace any solar equipment damaged by such casualty and provide some revenue protection under business interruption coverage up to 12 months. However, should the building not be rebuilt, SolarShare may lose the revenues for the remaining duration of the FIT contract. This risk only applies to a portion of the portfolio, is a common risk shared by all in the solar industry, and possibility of it occurring is remote. 19. Registered Account Eligibility Risk: Solar Bonds are RRSP and TFSA eligible because they are fully secured by mortgages on real property. There is a risk that Canada Revenue Agency might determine that solar PV installations are not fixtures, and therefore Solar Bonds are not secured against real property. There is a risk that the Solar Bonds ceased to be fully secured if the total value of Solar Bonds outstanding becomes greater than the value of the property securing the Solar Bonds. This could happen if the co-op sells more bonds than it has completed projects to secure them, or if the co-op isn t diligent in buying back Solar Bonds to match the decreasing value of the mortgages that back them. As previously discussed, the value of the assets declines to zero over the life of the FIT contracts. SolarShare is careful to be attentive to its cash flow needs, to address this risk. 20. Regulatory Risks: The Independent Electricity System Operator regulates Ontario s electricity system, and there are risks associated with non-compliance as outlined below: a. Domestic Content In order to maintain the validity of FIT1 and FIT2 contracts, each generation facility must meet the domestic content requirements that were present at the time of the FIT contract approval, as outlined by the IESO (this requirement does not apply to FIT3 and later). SolarShare must, for the duration of each FIT1 and FIT2 contract, maintain records that verify the domestic content requirements have been met. SolarShare engaged a third party to review these records for completeness, and those projects held by CSA 1 and CSA 2 have been further scrutinized during long term commercial debt due diligence processes. However, the IESO can audit these records at any time and if they deem that the records are insufficient, the FIT contract can be cancelled. SolarShare has made best efforts to ensure the proper documentation has been maintained, but there are no assurances that the IESO will deem this sufficient in the case of an audit. b. FIT Contract Risk IESO and Ontario government regulations and policies may change. While FIT contracts are legally binding obligations, there is no absolute assurance that the IESO or the Ontario government will not curtail or change the regulations and policies for future FIT contracts. c. Membership Risk SolarShare s Community Participation Projects require that SolarShare maintain a minimum number of qualifying members in each project s host jurisdiction. SolarShare regularly monitors membership to ensure ongoing compliance and the IESO provides a grace period to come into compliance; however, FIT contracts may be in jeopardy should SolarShare fail to maintain the required membership. 36

38 21. Satcon Warranty: Satcon Technology Corp. filed for bankruptcy on Wednesday, October 17, 2012 and was subsequently liquidated, thereby voiding the manufacturer's warranties. SolarShare s Waterview project utilizes Satcon inverters. Due to the number of Satcon inverters operating in the field, however, a number of independent parts and service providers have been identified who are fully capable of keeping these units in service. One company in particular, has taken on former Satcon technical staff and provides specialized high-level Satcon technical support, further ensuring the longevity of these units. 22. Timing: The timelines to develop all of the projects is subject to SolarShare receiving all necessary permissions and licenses, obtaining timely delivery of solar panels and complete requirements for a FIT contract with the IESO. There may be a negative impact on SolarShare if the timing set forth in the timelines are not met. 23. Uni-Solar Warranties: On February 14, 2012, Energy Conversion Devices, Inc. (ECD) and its subsidiaries including United Solar Ovonic LLC (Uni-Solar") filed for bankruptcy and was later liquidated. This voided the manufacturer's warranties of the Uni-Solar PV panels that SolarShare uses on its Waterview project. To mitigate the effects of this, SolarShare has purchased replacement panels equal to approximately 3% of the total system to hold in inventory. 24. Unknown Risk Factors: SolarShare may also be subject to other unknown or unforeseen risk factors that could potentially affect its profitability and solvency. Some of these risk factors could include, but are not limited to, failure to comply with new or revised governing statutes, or climate variability resulting in reduced performance. Any adverse unforeseen risk factors that materialize may negatively affect SolarShare s profitability and solvency. 25. Warranties: SolarShare has endeavoured to choose products and technologies with solid warranties from reputable companies with a track record of performance and that are in good financial health, however, there is no assurance that SolarShare s suppliers will not go out of business and thus be unable to honour their warrantees. 8. DESCRIPTION OF CAPITAL STRUCTURE SolarShare is a non-profit co-operative corporation and has no share capital. The construction financing obtained from CPC for SolarShare s current projects is described in Section 13. The Solar Bonds are described in Section DESCRIPTION OF SECURITIES OFFERED SolarShare is offering to sell Solar Bonds to its members and to corporations (corporations may purchase the bonds, but may not be members of SolarShare, in order meet the IESO s requirement for renewable energy co-ops). The form of Solar Bond is attached in 37

39 Schedule C Form of 5-Year Solar Bond. The minimum purchase of $1,000 Solar Bond is required. The following table describes the Solar Bonds in detail. DESCRIPTION OF 5-YEAR SOLAR BONDS OFFERED Minimum Offering: Maximum Offering: Minimum Individual Purchase: Maximum Individual Purchase: Security Nil $60,148,234 $1,000 No maximum Repayment of the Solar Bonds is secured by a mortgage registered on all of the project leases and equipment held by SolarShare, second to the senior debt, if any, and held by a trustee appointed by TREC pursuant to a Trust Agreement (see Schedule B) for the benefit of all bondholders. The mortgages that secure the Solar Bonds are different from traditional mortgages on appreciating assets. A traditional mortgage is usually applied to appreciating assets such as land, whereas this mortgage is on a lease and on depreciating assets (the solar generating equipment), and so the security for the bondholders will decline over time and may have little value at the time the principal on the bonds is redeemed. Since the value of the security declines over time, the cash position of the co-op becomes more important as the source of security for the repayment of the principal. The assets behind the mortgage securing the construction financing and the Solar Bonds include all the equipment and contracts relating to the production and sale of solar electricity to the IESO. Where a project has been acquired by or transferred to a subsidiary, such as CSA 1 or CSA 2, SolarShare has taken steps to ensure that the bondholders maintain security over those projects. The subsidiary has given security to Brian Iler, as Trustee for the bondholders, which has been registered on title to the property. Since SolarShare is the sole shareholder of the subsidiary, the security given by the subsidiary secure SolarShare s obligations to the bondholders pursuant to the Trust Agreement between Brian Iler and SolarShare. SolarShare has also taken steps to ensure that the subsidiary is not easily sold-off or disposed of. The only shareholder of the subsidiary is SolarShare, which allows 38

40 SolarShare to have complete control over the management of the affairs of the subsidiary. Further, the Articles of Incorporation for each subsidiary sets out certain restrictions to ensure that the subsidiary manages all assets in a manner that prevents them from being transferred to a business. This includes a provision only allows shares, or beneficial interest in shares, of the subsidiary to be transferred to a non profit corporation whose objects include the promotion and development of renewable energy resources. The Articles of each subsidiary also prohibit the subsidiary from amalgamating with a corporation unless the corporation is a non-profit corporation whose objects include the promotion and development of renewable energy resources. It is a requirement of the long-term debt lenders that the shares of Community Solar Assets 1 Limited be transferable to it in the event of a default under the terms of its loan. In that event, the lender will be entitled to amend the Articles to eliminate these constraints. No changes in the security can be made without the bondholders consent by vote as set out in the Trust Agreement. Interest Rate Terms and Redemption All 5-Year Solar Bonds earn 5% interest. Investors can choose either: Simple interest - Interest is calculated and paid out semi-annually through electronic fund transfers. Compound interest in a registered account Interest is compounded annually and paid upon maturity. This option is only offered if the investment is being made through a registered account such as RRSP or TFSA. 5-Year Solar Bonds issued under this offering statement mature 5 years after the date of purchase. For bonds purchased after this date, the first interest payment will be prorated to the date of the investment. SolarShare may, before maturity, and upon 60 days notice, offer to repay all or a portion of the principal outstanding, and shall communicate such offer to all members. It shall then repay those who express a desire to be repaid pro rata. SolarShare also has the right to prepay at any time without penalty. To address concerns that long term debt lenders may raise in light of possible future market interest rate fluctuations, principal repayment on maturity may not occur until SolarShare is able to do so or replacement capital is obtained. Such decision would be made by the Board of Directors of SolarShare. The rights of the Bondholders are not otherwise affected by such a postponement and their outstanding bonds will continue to accrue interest at the indicated rate. 39

41 Rank Transfer Dissolution The Solar Bonds will rank equally with each other but will rank second to a senior long-term debt lender. They rank ahead of the obligations to CPC (or any other construction lender) and the contribution of surplus to TREC s Renewable Energy Fund. Subject to a $50 administration fee and approval from the Board of Directors. Such approval shall not unreasonably be withheld, provided the transfer is to another member of SolarShare. In the event of the dissolution or liquidation of SolarShare, the Bondholders shall be entitled to be paid, after the retirement of the senior debt, the amount of principal outstanding, plus any interest earned but unpaid. Upon payment of such amount, the holders of Bonds shall not be entitled to any further share in the distribution of the assets of SolarShare. Voting Rights Bondholders who are members, have a right to one vote per member at all meetings of SolarShare members, irrespective of the Solar Bond amount held. The form of the 15-Year Solar Bond is also attached in Schedule D Form of the 15-Year Solar Bond. The minimum purchase of $10,000 is required. The following table describes the Mortgage Bonds in detail. DESCRIPTION OF 15-YEAR SOLAR BONDS OFFERED Minimum Offering: Maximum Offering: Minimum Individual Purchase: Maximum Individual Purchase: Security Nil $60,148,234 $10,000 No maximum Repayment of the 15-Year Solar Bonds is secured by a mortgage registered on all of the project leases and equipment held by SolarShare, second to the senior debt, if 40

42 DESCRIPTION OF 15-YEAR SOLAR BONDS OFFERED any, pari-passu with the 5-Year Solar Bonds, and held by a trustee appointed by TREC pursuant to a Trust Agreement (see Schedule B) for the benefit of all bondholders. The mortgages that secure the Solar Bonds are different from traditional mortgages on appreciating assets. A traditional mortgage is usually applied to appreciating assets such as land, whereas this mortgage is on a lease and on depreciating assets (the solar generating equipment), and so the security for the bondholders will decline over time and may have little value at the time the principal on the bonds is redeemed. Since the value of the security declines over time, the cash position of the co-op becomes more important as the source of security for the repayment of the principal. The assets behind the mortgage securing the construction financing and the Solar Bonds include all the equipment and contracts relating to the production and sale of solar electricity to the IESO. Where a project has been acquired by or transferred to a subsidiary, such as CSA 1 or CSA 2, SolarShare has taken steps to ensure that the bondholders maintain security over those projects. The subsidiary has given security to Brian Iler, as Trustee for the bondholders, which has been registered on title to the property. Since SolarShare is the sole shareholder of the subsidiary, the security given by the subsidiary secure SolarShare s obligations to the bondholders pursuant to the Trust Agreement between Brian Iler and SolarShare. SolarShare has also taken steps to ensure that the subsidiary is not easily sold off or disposed of. The only shareholder of the subsidiary is SolarShare, which allows SolarShare to have complete control over the management of the affairs of the subsidiary. Further, the Articles of Incorporation for each subsidiary sets out certain restrictions to ensure that the subsidiary manages all assets in a manner that prevents them from being transferred to a business. This includes a provision only allows shares, or beneficial interest in shares, of the subsidiary to be transferred to a nonprofit corporation whose objects include the promotion and development of renewable energy resources. The Articles of each subsidiary also prohibit the subsidiary from amalgamating with a corporation unless the corporation is a not for profit corporation whose objects include the promotion and development of renewable energy resources. It is a requirement of the long-term debt lenders that the shares of Community Solar Assets 1 Limited be transferable to it in the event of a default under the terms of its loan. In that event, the lender will be entitled to amend the Articles to eliminate these constraints. No changes in the security can be made without the bondholders consent by vote as set out in the Trust Agreement. 41

43 DESCRIPTION OF 15-YEAR SOLAR BONDS OFFERED Interest Rate Repayment Terms and Redemption Rank Transfer Dissolution All 15-Year Solar Bonds earn 6% interest. These are self-amortizing bonds, with blended payments of both principal and interest being made semi-annually to bondholders. While the payment amount is fixed, the ratio of interest and principal changes over time, according to standard amortization tables. Repayment will be comprised of twice yearly equal amounts of blended principal and interest with an amortization period equal to the 15-year term of the Solar Bond 15-Year Solar Bonds issued under this offering statement mature 15 years after the date of purchase. All bond terms begin on the first day of the month after the bond is purchased. SolarShare may, before maturity, and upon 60 days notice, offer to repay all or a portion of the principal outstanding, and shall communicate such offer to all members. It shall then repay those who express a desire to be repaid pro rata. SolarShare also has the right to prepay at any time without penalty. If at any time SolarShare is unable to make its semi-annual payment, the payment will be postponed until SolarShare is able to fulfill its obligations. While SolarShare has budgeted for full and timely repayment, this provision is to address the concerns of long-term debt providers who are concerned about subordinated debt holders being able to trigger a default and a liquidation of assets. A decision to postpone any payment would be made by the Board of Directors. The rights of the Bondholders are not otherwise affected by such a postponement and their outstanding bonds will continue to accrue interest at the indicated rate. The Solar Bonds will rank equally with each other and the 5-Year Solar Bonds but will rank second to any senior long-term debt lender. They rank ahead of the obligations to CPC (or any other construction lender) and the contribution of surplus to TREC s Renewable Energy Fund. Subject to a $50 administration fee and approval from the Board of Directors. Such approval shall not unreasonably be withheld, provided the transfer is to another member of SolarShare. In the event of the dissolution or liquidation of SolarShare, the Bondholders shall be entitled to be paid, after the retirement of the Debt Financing, the amount of principal outstanding, plus any interest earned but unpaid. Upon payment of such amount, the holders of Bonds shall not be entitled to any further share in the distribution of the assets of SolarShare. 42

44 DESCRIPTION OF 15-YEAR SOLAR BONDS OFFERED Voting Rights Bondholders, who are members, have a right to one vote per member at all meetings of SolarShare members, irrespective of the Solar Bond amount held. Community Power Capital (CPC) In addition to Solar Bonds, SolarShare will borrow construction financing in order to construct its projects. This debt is not offered to members but to a specific lender (CPC), a community power financing organization that provides construction financing to SolarShare and other renewable energy co-ops. Following COD, this CPC debt is refinanced with a combination of Solar Bonds and Debt Financing. Please see Section 16 Material Contracts for details. 10. METHOD OF THE SALE OF SECURITIES All bonds sold pursuant to this Offering Statement will be sold exclusively by agents of SolarShare. 11. DESCRIPTION OF THE MARKET ON WHICH THE SECURITIES MAY BE SOLD There is no market through which Solar Bonds may be sold and none is expected to develop. Purchasers may not be able to resell Solar Bonds purchased pursuant to this Offering Statement. No Solar Bonds of SolarShare may be transferred without the express consent of the Board of Directors. SolarShare will use its best efforts to match buyers and sellers but there can be no guarantee that holders of the Solar Bonds will be able to sell them. 12. MINIMUM AND MAXIMUM AMOUNTS There is no minimum offering as this Solar Bond offering is a continuation of the previous Offering Statement. If no Solar Bonds are sold under this offering then the construction financing will remain in place until replacement financing can be found or that they can be repaid from operational revenues. The minimum and maximum individual purchases permitted for the Solar Bonds offered pursuant to this Offering Statement is as follows: 5-Year Solar Bonds 15-Year Solar Bonds Minimum Individual Purchase $1,000 $10,000 Maximum Individual Purchase No maximum No Maximum 43

45 13. SECURITIES AND OTHER DEBT OBLIGATIONS OF SOLARSHARE The following table describes the amount and particulars of any securities, mortgages, bonds, debentures, or other debt obligations of SolarShare as of December 31, CREDITOR AMOUNT DESCRIPTION CPC $4,613,341 Solar Bondholders $33,980,589 CSA 1 Debt Financier $3,622,020 CSA 2 Debt Financier $12,989,631 Solera $453,060 Promissory note that carry different interest rates that reflect the risks different risk for when the funds are utilized for pre-cod or post-cod operations. The notes are secured with by the trustee s mortgage on the assets but are subordinate to both the Debt Financing and the Solar Bonds. These Solar Bonds are for 5 and 15-year terms, carrying interest rates of 5% and 6% respectively. This is the provider of $4.2 million Debt Financing for the five projects held in CSA 1. The term of the loan is 16 years, starting at February 24, This is the provider of $ million Debt Financing for the nine projects held in CSA 2. The term of the loan is 15 years starting at September 6, This deferred payment transfers risk to Solera, and decreases over time. The term of the loan is 11 years, starting at October 27, 2015 with repayment commencing after 5 years. TOTAL $55,658,641 44

46 14. MATERIAL LEGAL PROCEEDINGS TO WHICH SOLARSHARE IS A PARTY SolarShare is not party to any material legal proceedings. 15. MATERIAL INTERESTS OF DIRECTORS, OFFICERS, AND EMPLOYEES 15.1 In the Operation of SolarShare Each of the Directors of SolarShare is a member of SolarShare. Mike Brigham, President, plays a strong management role in the daily activities of SolarShare, and does so as a volunteer. Brian Iler is a Partner with Iler Campbell LLP who are legal counsel for SolarShare. David Robertson is the owner of DLS Robertson Professional Corporation which provides professional services to prepare financials for external auditors and consulting on annual financial plan. Please see the table in Section 15.2 for more information In the Securities Offered Herein The Board of Directors will be offered the securities to be issued under this Offering Statement on the same terms as available to other members. Certain members of the Board of Directors are also investors in and directors of CPC, which provides construction financing to SolarShare. These obligations are described in Section 15.2 Securities and Other Debt Obligations of SolarShare. Proceeds from the sale of Solar Bonds will be used to buy out these and the remainder of the loan issued for the construction of the projects. The final table in Schedule K profiles SolarShare s Board of Director affiliations and financial holdings. 45

47 SolarShare Director Name TREC Director as well? SolarShare Bonds Owned (March 31, 2018) Community Power Capital Investment * (March 31, 2018) Professional Services Association with Contracted Services & Related Party Transactions** (for 2017) Other Spousal Investment Mike Brigham No $26,000 $6,372,139 Full time engagement providing general business management and technical support to all areas of SolarShare and primary liaison with all principle suppliers. No reimbursement for significant out of pocket expenses incurred upon behalf of SolarShare; Participates in SolarShare's Bell Mobility plan (billed at cost to Mike) Brian Iler Yes $683, $227,878 Partner with Iler Campbell LLP which provides legal counsel for the co-op; including project development for all SolarShare projects. Legal fees paid to Iler Campbell LLP in 2017: $65,615 Provides Iler Campbell board room facilities for monthly board meetings. Is Trustee for SolarShare Bond Holders. $100,000 in Solar Bonds 46

48 SolarShare Director Name TREC Director as well? SolarShare Bonds Owned (March 31, 2018) Community Power Capital Investment * (March 31, 2018) Professional Services Association with Contracted Services & Related Party Transactions** (for 2017) Other Spousal Investment David Robertson No $121,000 $102,984 Part-time engagement providing financial oversight and supporting TREC staff in monthly financial preparations for SolarShare. Owner of DLS Robertson Professional Corporation which provides professional services, including the preparation of the financials for external auditors, and consulting on annual financial plan. Fees paid in 2017: $12,938 Participates in SolarShare's Bell Mobility plan (billed at cost to David). $251,000 in Solar Bonds Julie Leach No $1,000 $0 N/A N/A N/A $29,000 in Solar Bonds Alison Goudy No $21,000 $0 N/A Is currently under contract for consulting work with Spark Power Corp., which owns Northwind Solutions and manages the GECO co-op N/A Richard Sung No $42,000 $0 N/A N/A N/A Ambrose Raftis No $10,000 $0 Founding and current Board Chair of Green Timiskaming Development Co-Op (GT) since Negotiated land lease contracts with local land N/A 47

49 SolarShare Director Name TREC Director as well? SolarShare Bonds Owned (March 31, 2018) Community Power Capital Investment * (March 31, 2018) Professional Services Association with Contracted Services & Related Party Transactions** (for 2017) Other Spousal Investment owners and won ten successful Feed-in-Tariff 3 contracts for 9-500kW ground mounts and one 250kW rooftop communityowned solar installation. GT has partnered with SolarShare for these 9 solar projects. Snow Removal in 2017: $1,245 Shama Ahmed Pieter De Koning No $12,000 $0 N/A N/A N/A No $1,000 $0 N/A N/A N/A *Community Power Capital Loan amounts including related parties: Mike Brigham Company ( Holdings Limited), charity (M.H. Brigham Foundation) and security provided for the Roynat loan Alison Goudy - $20,000 in bonds owned through Ontario Ltd., a holding company jointly owned with family member ** Related Party Transactions Source SolarShare Audited Financial Statements

50 16. MATERIAL CONTRACTS This section describes the material contracts entered into during the two years preceding this offering statement.fit Contracts 16.1 FIT Contracts The entire business model is dependent on having a FIT contract that guarantees a 20-year revenue stream from the sale of electricity to the IESO. There are three stages to the FIT contract: (1) conditional offer, (2) notice to proceed ( NTP ), and (3) commercial operation. Riskier development work occurs in the first stage, construction in the second, and revenues and refinancing in the third. Once the second stage is achieved, then the FIT contract is legally binding. Solar Bonds are used for refinancing in the third stage. Land Leases (per project) Each of SolarShare s projects has a 20-year lease with the landowner, which is a requirement of securing a FIT contract. Specific provisions and lease rates are different for each lease, but there are common elements that ensure the protection of this property right throughout the 20-year FIT contracts Maintenance Contract SolarShare has a maintenance contract with Northwind Solutions for all projects except for Sunfields. The contract covers planned services such as annual maintenance, and unplanned services such as emergency repairs. The emergency and regular maintenance of Sunfields, SolarShare s 17 ground mounted microfit projects, is by contract to Penguin Power EPC Agreements SolarShare has entered into fixed-price contracts with engineering, procurement and construction (EPC) companies to provide design and installation services for all of its projects. All EPC firms have been vetted to ensure quality workmanship and engineering and design expertise. 49

51 SolarShare members and partners open the Stronach project Trust Agreement for Solar Bond Holders SolarShare has entered into an agreement with Brian Iler, a lawyer, a director of TREC, SolarShare and CPC, and a lender to CPC, to hold a second charge on SolarShare s assets in trust for the benefit of the holders of Solar Bonds, TREC Renewable Energy Fund and CPC. The assets behind the mortgages securing the Solar Bonds include all the equipment and contracts relating to the production and sale of solar electricity to the IESO. The beneficiaries may, by a vote, instruct the trustee to realize on the mortgage security in the event of a default by SolarShare on its obligations. The trustee is obliged to implement the decision of the beneficiaries. The agreement acknowledges that the current trustee, Brian Iler, is a director of TREC and a director and officer of SolarShare. He agrees that in the event of any material conflict of interest arising, he will, within ninety days either eliminate such conflicts or resign from his position as trustee. In order to ensure transparency, all and any changes to Brian Iler s interests in SolarShare and CPC must be approved by the Board of Directors and recorded in the minutes of the meeting. The choice of Brian Iler as Trustee had these factors: As a current investor in CPC and SolarShare, Mr. Iler has an interest in ensuring that SolarShare s obligations to its investors and bondholders are satisfied; A trust company charges considerable fees, and requires a significant amount of expensive due diligence Mr. Iler is a lawyer and has professional fiduciary duties. 50

52 The SolarShare bondholders and TREC, with a decision approved by the holders of seventy five percent in value of the issued and outstanding Solar Bonds, plus seventy-five percent of the total number of bondholders and TREC, have the following powers: a) to direct or authorize the Trustee to exercise any power, right, remedy or authority given to it by this Agreement or the Solar Bonds in any manner specified or to refrain from exercising any such power, right, remedy or authority; and b) to waive, and direct the Trustee to waive, any default on the part of the Co-operative in complying with the provisions of this Trust Agreement or the Solar Bonds, including an Event of Default. A meeting of bondholders and TREC has the power to remove a Trustee, and to appoint one or more replacement trustees. The terms of the trust agreement are attached as Schedule B Terms of Trust Agreement 16.4 CPC Loans Community Power Capital provides the construction financing to construct SolarShare s projects. The notes carry interest rates of 10% for advances during project development and construction and 6% post-cod when funds are at less risk (ie. project is complete and operating). The loans are secured by the Trustee s mortgage registered on all the project leases and equipment, and rank behind the Solar Bonds. The loans are due on demand, but recourse in the event of default by SolarShare is limited to the assets of the projects in which the funds were invested Debt Financing for CSA 1 SolarShare has secured a debt facility from a mid-sized insurance company to provide long term financing to CSA 1. The loan has a 16-year term, for a total amount of $4,200,000. The loan is to be repaid by equal monthly payments of principal and interest over the term of the loan. A first charge on the assets within CSA 1, including its leases and FIT contracts, has been pledged as security Debt Financing for CSA 2 SolarShare has secured a debt facility to provide long term financing to CSA 2. The loan has a 15- year term, for a total amount of $13,194,000. The loan is to be repaid by equal monthly payments of principal and interest over the term of the loan. A first charge on the assets within CSA 2, including its leases and FIT contracts, has been pledged as security TREC Service Agreement SolarShare has retained TREC to carry out certain functions and services on its behalf including Administrative Services and Member Management Services. 51

53 16.8 TREC Renewable Energy Fund Agreement A Renewable Energy Fund Agreement has been entered into between TREC and SolarShare. It includes provisions as follows: 1. The TREC Renewable Energy Fund shall provide funding for future projects of SolarShare that have been approved by the Investment Committee from the Fund. 2. The Investment Committee is empowered to determine how the money received by TREC for the Renewable Energy Fund is invested in those future projects. 3. SolarShare will have at a minimum of at least one permanent seat on the Renewable Energy Fund Investment Committee, and up to 50% of the seats on the Investment Committee if and when SolarShare s contribution to the fund is 50% or greater than the total fund amount. Committee seats will be redistributed annually, based on the proportion of investment from the participating co-ops. 4. SolarShare shall at all times remain a non-profit incorporated under the Act) whose membership is comprised primarily of those persons who have purchased Solar Bonds from the co-operative. 5. SolarShare shall record its accounting surplus annually as a liability to TREC to be placed into the Renewable Energy Fund. That liability shall be paid out to TREC after the following items: a. SolarShare shall retain enough cash in its accounts to support its reasonable working capital needs. b. SolarShare shall retain sufficient cash in its accounts to pay down loans and/or bank debt as it deems necessary c. SolarShare shall retain sufficient cash to retire member Solar Bonds as it deems necessary d. All residual cash shall be paid to TREC to be placed in the Renewable Energy Fund as settlement of the liability. While there is an obligation to assign any surpluses to TREC s Renewable Energy Fund, SolarShare is entitled to keep sufficient funds to meets its obligations, which include interest payments on the bonds and repayment of the bonds on their maturity. The terms of the Renewable Energy Fund Agreement are attached as Schedule H Community Wealth Non-Profit Corporation SolarShare is formalizing an agreement with Community Wealth Non-Profit Corporation to transfer to 25% of the surplus resulting from the operations of nine projects purchased from the Green Timiskaming Development Co-operative Incorporated. The project group consists of eight ground-mounted and one rooftop (Earlton) project, which SolarShare completed and are all of which are now in operation. The surplus is to be calculated by SolarShare and paid at the end of the 20-year FIT contract for these projects. 52

54 16.11 Wintergreen and EcoPerth SolarShare has agreements with two organizations to collaboratively develop new solar projects. Wintergreen Renewable Energy Co-op is a Kingston-based, community-owned co-operative, which helps fight climate change by developing and investing in community-based renewable energy projects. EcoPerth is a not-for-profit organization taking a local approach to addressing climate change. Their goal is to become a model community demonstrating how a town can respond to the climate change challenge and are pursuing several initiatives throughout Lanark County in order to achieve this goal. Under these agreements, both organizations act as agents for SolarShare in the sale of Solar Bonds in their regions as well as seeking out new opportunities for solar project development opportunities in these areas Green Timiskaming Co-op Green Timiskaming was established in 2009 as a community-owned, not-for-profit development co-operative devoted to building a greener way of life for the people of Timiskaming. SolarShare purchased and developed Green Timiskaming s portfolio of 9 FIT3 projects (the 250 kw Earlton Recreation Centre rooftop project and 8 Sundance ground mount projects at 500 kw each) Queen Street Solar Co-operative Queen Street Solar Co-operative is a renewable energy co-op that provided its members the opportunity to invest in community solar projects. In 2017, Queen Street Solar decided to wind up its operations and is in the process of selling its solar project interests to SolarShare. SolarShare subsequently took over the development of a 250 kw project in Kaladar Ontario, now in operation, and a 250 kw project in Dewey, Ontario, currently under construction Claremont Project SolarShare has completed its purchase of Queen Street Solar s 50.1% interest in the Claremont Project, a 100kW project in operation on the roof of the Claremont Community Centre. The remaining 49.9% of the ownership is with Solera Sustainable Energies, a solar development company, and Veridian Corporation, the electrical utility covering the Pickering area Bullfrog Power Bullfrog Power is a strategic partner to SolarShare. Bullfrog has invested both in Solar Bonds and CP Capital. In addition to investing, Bullfrog lends its strong brand integrity by promoting SolarShare to its customers and sharing marketing and communications expertise in the green energy space. Bullfrog Power offers renewable energy solutions that enable homes and businesses to reduce their environmental impact and help create a cleaner, healthier world. Bullfrog s green electricity 53

55 comes exclusively from wind and hydro facilities that have been certified as low impact by Environment Canada under its EcoLogo program instead of from polluting sources like coal, oil, natural gas and nuclear. SolarShare board members and project partners. As a Certified B Corporation, Bullfrog Power meets higher standards of social and environmental performance, transparency, and accountability. Unlike traditional corporations, Certified B Corporations are required to consider the impact of their decisions on their employees, suppliers, community, consumers, and the environment. Thousands of Canadian homes and businesses are doing their part to address climate change and air pollution by switching to green energy with Bullfrog Power DISTRIBUTION OF SURPLUS, PATRONAGE RETURNS AND OTHER DISTRIBUTIONS As a non-profit co-operative, SolarShare is not permitted to distribute any surplus to its members, nor pay patronage dividends. In the event of the dissolution or liquidation of SolarShare, the holders of Solar Bonds shall be entitled to be paid, after the retirement of the prior Debt Financing, the amount of principal outstanding, plus any interest unpaid. Upon payment of the above amount, the holders of Solar Bonds, as members, shall not be entitled to any further share in the distribution of the assets of SolarShare. Net assets of SolarShare, on dissolution after payment of all liabilities, are to be paid to another co-operative or charity, as decided by the SolarShare Board. Any surpluses will be placed in the TREC Renewable Energy Fund that is managed by TREC and will be used to finance more renewable energy projects, thereby increasing the deployment of low-carbon technologies in Ontario. While there is an obligation to assign any surpluses to TREC s Renewable Energy Fund, SolarShare has full discretion to keep sufficient funds to meets its obligations, which include interest payments on the bonds and repayment of the bonds on their maturity. 54

56 18. DESCRIPTION OF ANY OTHER MATERIAL FACTS A copy of this Offering Statement must be given to each investor before SolarShare may legally accept any payment. None of the securities issued by SolarShare pursuant to this Offering Statement will be in bearer form. This Offering Statement will expire on May 17 th, 2019, after which date no further sale of securities shall occur, unless a new Offering Statement has been filed and receipted. 19. CERTIFICATE OF DISCLOSURE THE FOREGOING CONSTITUTES FULL, TRUE, AND PLAIN DISCLOSURE OF ALL MATERIAL FACTS RELATING TO THE SECURITIES OFFERED BY THIS OFFERING STATEMENT AS REQUIRED BY SECTION 35 OF THE CO-OPERATIVE CORPORATIONS ACT. Dated Toronto, Ontario this 17th day of May 2018 Michael Brigham Board Chair & President David Robertson Treasurer 55

57 Schedule A Pro Forma Financial Statements Pro Forma Statement of Financial Position Revenues Coop-held Projects (including JV) 1,528,616 1,573,202 1,563,022 1,553,217 1,213, , , , , ,096 CSA 1 779, , , , , , , CSA 2 2,504,306 2,390,650 2,375,996 2,361,273 2,211,405 2,192,463 2,177,520 2,036, ,374 42,460 CSA 4 2,964,671 2,954,432 2,926,954 2,908,095 2,662,931 2,644,072 2,625,213 2,611,937 2,611,937 2,611,937 TOTAL REVENUES 7,690,545 7,693,605 7,636,664 7,588,652 6,803,850 6,535,374 6,300,985 5,623,361 3,742,785 2,773,493 Operating Expenses Coop-held Projects 415, , , , , , , , , ,718 CSA 1 138, , , , , , , CSA 2 387, , , , , , , , ,245 29,375 CSA 4 305, , , , , , , , , ,127 TOTAL OPERATING EXPENSES 1,247,083 1,268,739 1,283,622 1,298,883 1,319,601 1,301,437 1,241,933 1,150, , ,220 JV Minority Interest Expenses 267, , , , , , , ,528 74,233 - Operating Income 6,175,313 6,159,765 6,090,803 6,030,404 5,254,496 5,007,240 4,835,430 4,252,224 2,949,340 1,932,272 Interest, Solar Bonds 1,769,045 1,916,465 1,808,972 1,552, , , ,207 36, Interest, Construction

58 Interest, Debt Finance 838, , , , ,295 49,581 2, Amortization 2,918,082 2,940,287 2,942,352 2,945,634 3,055,064 3,061,705 3,027,428 2,650,303 1,875,645 1,535,774 Co-op Expenses 334, , , , , , , , , ,515 TOTAL EXPENSES 7,422,196 7,571,761 7,439,697 7,073,002 5,699,045 5,407,265 5,039,590 4,479,161 3,053,983 2,817,726 NET INCOME 268, , , ,650 1,104,805 1,128,109 1,261,396 1,144, ,802 (44,234) 57

59 Pro Forma Statement of Operations and Changes in Net Assets Assets Current Assets Cash 162, , ,428 (1,359,491) 3,185,681 1,347,869 3,396,307 5,956,247 8,438,742 9,845,224 Other Current Assets 3,611,003 3,611,003 3,611,003 3,611,003 3,611,003 3,611,003 3,611,003 3,611,003 3,611,003 3,611,003 Prepaid leases CSA 4 224, , , ,750 62,250 49,800 37,350 24,900 12,450 - Total Current Assets 3,998,043 3,966,073 4,057,631 2,438,262 6,858,934 5,008,672 7,044,660 9,592,150 12,062,195 13,456,247 Capital Assets Coop-held Projects 6,476,726 6,054,179 5,629,566 5,202,682 1,061, , , , ,826 86,232 CSA 1 4,734,665 4,416,137 4,097,609 3,793, , ,165 30, CSA 2 15,390,439 14,437,772 13,499,248 12,559,714 3,299,478 2,257,655 1,215, ,821 17,568 0 CSA 4 22,111,526 20,926,001 19,740,476 18,554,951 7,979,143 6,619,604 5,253,201 3,877,751 2,489,594 1,081,372 Total Capital Assets 48,713,356 45,834,089 42,966,899 40,110,390 13,026,373 10,020,085 7,038,521 4,435,230 2,653,988 1,167,605 Debt Service Reserve Fund 779, , , , , Major Maintenance Reserve Fund 168, , , , , TOTAL ASSETS 53,659,463 50,832,785 48,128,127 43,709,749 20,829,319 15,028,757 14,083,181 14,027,381 14,716,183 14,623,831 58

60 Liabilities Current Liabilities 2,627,057 2,627,057 2,627,057 2,627,057 2,627,057 2,627,057 2,627,057 2,627,057 2,627,057 2,627,057 Current Portion of Long Term Debt 921, , , ,873 1,133, , Loan, CPC Construction 770, , , , , , , , , ,280 Solar Bonds 37,372,354 35,307,101 33,284,391 29,261,267 8,943,570 3,148,780 1,200, Loan, Long Term Debt 14,283,978 13,405,062 12,494,159 11,549, , TOTAL LIABILITIES 55,975,242 53,026,720 50,125,094 45,191,067 13,732,979 6,804,308 4,597,337 3,397,337 3,397,337 3,397,337 RETAINED EARNINGS Open (2,632,246) (2,363,897) (2,242,053) (2,045,085) 5,943,417 7,048,222 8,176,331 9,437,726 10,581,926 11,270,728 plus Net INCOME 268, , , ,649 1,104,805 1,128,109 1,261,396 1,144, ,802 (44,234) RETAINED EARNINGS Close (2,363,897) (2,242,053) (2,045,085) (1,529,436) 7,048,222 8,176,331 9,437,726 10,581,926 11,270,728 11,226,495 LIABILITIES & RETAINED EARNINGS 53,659,463 50,832,785 48,128,127 43,709,749 20,829,319 15,028,757 14,083,181 14,027,381 14,716,183 14,623,831 59

61 Pro Forma Statement of Cash Flow Cash from Operations Net Income (Loss) 268, , , ,649 1,104,805 1,128,109 1,261,396 1,144, ,802 (44,234) Amortization 2,918,082 2,940,287 2,942,352 2,945,634 3,055,064 3,061,705 3,027,428 2,650,303 1,829,429 1,535,774 Prepaid Lease Amortization CSA 4 12,450 12,450 12,450 12,450 12,450 12,450 12,450 12,450 12,450 12,450 Accrued Interest 165, , , TOTAL FROM OPERATIONS 3,364,779 3,316,770 3,347,186 3,473,733 4,172,318 4,202,264 4,301,274 3,805,952 2,530,681 1,455,872 Cash from Investing & Financing Prepaid Leases CSA CAPEX Co-op Held Projects (990,257) (22,716) (22,716) (22,716) (16,056) (16,190) (5,657) (5,798) (5,943) (6,092) CSA (13,962) CSA (14,143) (14,143) (13,357) CSA (262,369) (39,227) (40,207) (41,212) (42,243) (43,299) Expenditure on Capital Costs (990,257) (22,716) (36,859) (50,821) (291,782) (55,417) (45,864) (47,011) (48,186) (49,391) CPC Construction Loan 60

62 CSA General (5,376,127) CPC Construction Loan Increase (Decrease) (5,376,127) Debt Financing Co-op Held Projects CSA 1 (222,315) (229,216) (236,454) (244,043) (85,058) CSA 2 (681,680) (692,356) (680,766) (705,164) (1,087,716) (1,133,880) (258,192) Debt Financing Advances (Repayment) (903,995) (921,573) (917,220) (949,207) (1,172,775) (1,133,880) (258,192) Solar Bonds SolarShare 4,446,243 (2,307,442) (2,218,125) (4,023,124) (1,635,807) (5,794,790) (1,948,780) (1,200,000) - - Solar Bonds Received (Repaid) 4,446,243 (2,307,442) (2,218,125) (4,023,124) (1,635,807) (5,794,790) (1,948,780) (1,200,000) - - Debt Service Reserve Fund CSA 1 (1,024) (1,034) (1,045) (1,055) (1,166) 117, CSA 2 (3,363) (3,379) (3,396) (3,413) (3,588) 721, DSRF Receipts (Contributions) (4,387) (4,414) (4,441) (4,469) (4,754) 838,

63 Major Maintenance Reserve Fund CSA 1 (25,351) (25,605) (25,861) (12,157) 179 (18,040) CSA 2 (54,270) (54,541) (40,671) (40,875) (41,053) 123, MMRF Receipts (Contributions) (79,621) (80,146) (66,532) (53,032) (40,875) 105, TOTAL FROM INVESTING & FINANCING (2,908,144) (3,336,291) (3,243,177) (5,080,652 (3,145,993) (6,040,076) (2,252,836) (1,247,011) (48,186) (49,391) TOTAL CHANGES IN CASH 456,635 (19,520) 104,008 (1,606,919) 1,026,326 (1,837,812) 2,048,438 2,559,941 2,482,495 1,406,482 Cash, beginning of period (293,695) 162, , ,428 2,159,355 3,185,681 1,347,869 3,396,307 5,956,247 8,438,742 Cash, end of period 162, , ,428 (1,359,491) 3,185,681 1,347,869 3,396,307 5,956,247 8,438,742 9,845,224 62

64 Schedule B Terms of Trust Agreement 1. DEFINITIONS In this Agreement: 1. Bondholders means the holders of Solar Bonds, who provide financing for the Co-operative s projects. 2. Charges mean the charges of the Leases and Equipment, given as collateral security for the Notes, Solar Bonds, and the obligations of the Co-operative under the TREC Agreements, as registered in the relevant registry systems, given by the Co-operative to the Trustee. 3. Events of Default are as set out in Schedule A. 4. Leases and Equipment means the leases of all solar photovoltaic sites owned by the Cooperative, and the equipment installed by the Co-operative on those sites. 5. Note means a Promissory Note issued to the Noteholders pursuant to this Agreement, as secured by the Charges. 6. Noteholders means the holders of Notes, who provide bridge financing for the Co-operative s projects. 7. Prime Rate means the commercial lending rate of interest expressed as an annual rate quoted or published by Bank of Montreal as the reference rate of interest from time to time (commonly known as prime) for the purpose of determining the rate of interest that it charges to its commercial customers for loans in Canadian Funds. 8. Solar Bond means a bond issued to the Bondholders. 9. TREC means Toronto Renewable Energy Co-operative Inc., which provides development, financial and other services to the Co-operative. 10. TREC Agreement means the Agreement in place from time to time between TREC and the Co-operative, entitling TREC to be paid certain surplus funds of the Co-operative in return for financial support from TREC. 2. RIGHTS AND DUTIES OF TRUSTEE The Trustee accepts the trusts in this Agreement and agrees to perform the same upon the terms and conditions set forth in this Agreement as Trustee for the Bondholders, Noteholders and TREC. The Trustee, in exercising his power and discharging his duties under this Agreement, shall act honestly and in good faith with a view to the best interests of the Bondholders, Noteholders and TREC, and exercise the care, diligence and skill of a reasonably prudent trustee. The Trustee shall have the power to institute and to maintain such actions and proceedings as he may consider necessary or expedient to preserve, protect or enforce his interests and the interests of the Bondholders, Noteholders and TREC. 63

65 Trustee represents that at the time of the execution of this Agreement, no material conflict of interest exists in the his role as fiduciary to the Bondholders, Noteholders and TREC, save his role as a director and officer of TREC and the Co-operative, and lender to the Co-operative, and agrees that in the event of a new material conflict of interest arising, he will, within ninety days either eliminate such conflicts or resign from his position as trustee. 3. CERTIFICATION BY TRUSTEE No Solar Bond or Note shall be issued, or if issued, shall be effective until it has been certified by or on behalf of the Trustee, and such certification by the Trustee upon any Solar Bond shall be conclusive evidence as against the Co-operative that the Solar Bond or Note has been duly issued under this Agreement, and is a valid obligation of the Co-operative. The certificate of the Trustee on Solar Bonds and Notes issued in accordance with this Agreement shall not be construed as a representation or warranty by the Trustee as to the validity of this Agreement or of the Solar Bonds or Notes (except for certification as a Solar Bond or Note referred to in this Agreement) and the Trustee shall in no respect be liable or answerable for the use made of the Bonds or Notes or any of them or the proceeds thereof. 4. COVENANT TO PAY The Co-operative agrees with the Trustee that so long as any Solar Bonds or Notes remain outstanding, the Co-operative shall pay or cause to be paid to every holder of every Solar Bond or Note issued under this Agreement, the principal and interest accrued from every Bond or Note, including, in case of default, interest on all amounts overdue at the specified rate, at the dates and places and in the manner mentioned in the Bonds or Notes. 5. RANKING All Solar Bonds and Notes shall rank rateably without discrimination, preference or priority, whatever may be the actual date or terms of the issue of the Bond or Note. 6. VARIATION OF RIGHTS Any of the rights conferred on the Bondholders, Noteholders and TREC may at any time be varied or abrogated (whether with the consent in writing or at a meeting) by the holders of seventy five percent in value of the issued and outstanding Solar Bonds and Notes, plus seventy-five percent of the total number of Bondholders, Noteholders and TREC, and any variation so made shall be binding on all the Bondholders, Noteholders and TREC, each of whom shall, on the request of the Co-operative, surrender his/her Solar Bond or Note to the Co-operative in order that a memorandum of such variation may be endorsed on it. 7. MEETINGS OF BONDHOLDERS, NOTEHOLDERS AND TREC The procedures for meetings of Bondholders, Noteholders and TREC are set out in Schedule B to this Trust Agreement. 8. POWERS EXERCISABLE BY MEETING In addition to the powers under paragraph 6, the Bondholders, Noteholders and TREC upon the consent in writing, or at a meeting, of the holders of seventy five percent in value of the issued 64

66 and outstanding Solar Bonds or Notes, plus seventy-five percent of the total number of Bondholders, Noteholders and TREC, shall have the following powers: 1. power to direct or authorize the Trustee to exercise any power, right, remedy or authority given to it by this Agreement or the Solar Bonds or Notes in any manner specified or to refrain from exercising any such power, right, remedy or authority; and 2. power to waive, and direct the Trustee to waive, any default on the part of the Cooperative in complying with the provisions of this Trust Agreement or the Solar Bonds or Notes, including an Event of Default. 9. MINUTES Minutes of all resolutions and proceedings at every such meeting of Bondholders, Noteholders and TREC shall be made and duly entered in books to be from time to time provided for that purpose by the Trustee at the expense of the Co-operative. 10. BINDING EFFECTS OF RESOLUTIONS Every resolution shall be binding upon all of the Bondholders, Noteholders and TREC, whether present at or absent from such meeting, and each and every Bondholder and the Trustee (subject to the provisions for its indemnity, below) shall be bound to give effect accordingly to every such resolution. 11. CHARGES As security for the due payment of all money payable pursuant to the Solar Bonds or Notes, and the TREC Agreement, the Co-operative shall deliver the Charges in favour of the Trustee on the Leases and Equipment, to rank subsequent to charges to financial institutions for the financing of the Co-operative s projects. The Trustee is authorized to execute such postponements of the Charges, and other related documents as are necessary to arrange for such prior financing. 12. PROCEEDINGS BY THE TRUSTEE 1. The Trustee shall give each Bondholder and Noteholder notice within 15 days of the Trustee becoming aware of the occurrence of an Event of Default. 2. Whenever any Event of Default has occurred, the Trustee, in the exercise of his discretion, or upon the decision of the Bondholders and Noteholders in a meeting called pursuant to Schedule E may proceed to enforce the rights of the Trustee under the Charges and the rights of the Bondholders and Noteholders by any remedy or proceeding authorized or permitted by law or equity and may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and of the Bondholders and Noteholders lodged in any bankruptcy, winding up or other judicial proceedings relative to the Co-operative and/or the Leases and Equipment. 3. No such remedy or proceeding for the enforcement of the rights of the Trustee or of the Bondholders and Noteholders shall be exclusive of or dependent on any other such 65

67 remedy but any one or more of such remedies may from time to time be exercised independently or in combination. 4. Upon the exercising or taking by the Trustee of any such remedies or proceedings, the principal and interest outstanding on all Solar Bonds or Notes then outstanding shall forthwith become due and payable to the Trustee. 5. All rights of action hereunder may be enforced by the Trustee without the possession of any of the Solar Bonds or Notes or the production thereof on the trial or other proceedings relative thereto. 6. No delay or omission of the Trustee or of the Bondholders and Noteholders to exercise any remedy referred to in this paragraph shall impair any such remedy or shall be construed to be a waiver or acquiescence of any default. 13. APPOINTMENT OF A RECEIVER At any time after an event of default has occurred, the Trustee may appoint by writing a receiver of the Leases and Equipment upon such terms regarding remuneration and otherwise as the Trustee shall think fit, and remove any receiver so appointed and appoint another in his/her place. The receiver so appointed shall be the agent of the Co-operative, and the Co-operative shall be responsible for such receiver s acts and defaults and for his/her remuneration, costs, charges and expenses to the exclusion of liability on the part of the Trustee or the Bondholders and Noteholders. Any receiver shall have power to: 1. Take possession of, collect and get in all or any part of the Leases and Equipment and, for that purpose, to commence, continue, appeal or discontinue proceedings in the name of the Co-operative or otherwise and to make any arrangement or compromise as the receiver considers necessary; 2. Borrow or raise money on all or any part of the Leases and Equipment for such purposes as may be approved by the Trustee; and 3. Sell or concur in selling all or any part of the Leases and Equipment without notice and in such manner as may seem advisable to the receiver, and to effect such sale by conveying in the name and on behalf of the Co-operative or otherwise. 14. APPLICATIONS OF PROCEEDS Money from time to time received by the Trustee or the receiver may be applied as follows: 1. First, to pay all expenses deemed necessary by the Trustee or the receiver affecting the Leases and Equipment; 2. Second, in keeping all charges and liens on the Leases and Equipment having priority over the Charges in good standing; 3. Third, in payment of the reasonable fees and disbursements of the receiver and the Trustee; 66

68 4. Fourth, in payment to the Bondholders and Noteholders of the principal and interest payable under the Solar Bonds or Notes; 5. Fifth, in payment to TREC of all monies outstanding under the TREC Agreements; and the balance, if any, shall be paid to the Co-operative. 15. INSURANCE The Co-operative will keep the Leases and Equipment insured to the its full value with a reputable insurance company against loss or damage by fire and such other risks as are in accordance with sound commercial practice normally insured against and shall produce the last receipts for such insurance to the Trustee for inspection on demand. 16. TRUSTEE REMUNERATION AND EXPENSES 1. The Trustee s fees and all reasonable expenses, disbursements and advances incurred or made by the Trustee in the administration or execution of the trusts hereby created (including the reasonable compensation and the disbursements of counsel and other advisors), both before any event of default and after, until all duties of the Trustee under the trusts in this Agreement has been fully performed, shall be paid or reimbursed upon request by the Co-operative, except any such expense, disbursement or advance as may arise from his negligence or willful default. 2. Any amount due under this section and unpaid thirty days after request for such payment shall bear interest at the Prime Rate plus 1% per annum from the expiration of such thirtyday period. After default, all amounts so payable and the interest thereon shall be payable out of any funds coming into the possession of the Trustee in priority to any payment of the principal or interest on the Solar Bonds or Notes to the Co-operative. 17. CHANGE OF TRUSTEE The Trustee may resign by notice in writing delivered to all Bondholders and Noteholders to take effect no earlier than the date of a meeting of Bondholders and Noteholders called to appoint a replacement. Prior to resigning, the Trustee shall call such a meeting. A meeting of Bondholders and Noteholders shall have the power to remove a Trustee, and to appoint one or more replacement trustees. 18. NOTICES 1. Every notice to be given to Bondholders and Noteholders shall be deemed to have been given if such notice is sent by prepaid mail to such Bondholders and Noteholders at their addresses as set out in the records of the Trustee from time to time. 2. Any notice to the Trustee under the provisions of this Agreement shall be valid and effective if delivered to the Trustee by prepaid regular mail, addressed to the Trustee at: 150 John Street, Seventh Floor Toronto, Ontario M5V 3E3 67

69 Any notice to the Co-operative shall be deemed valid and effective if delivered to an officer of the Co-operative or if sent by prepaid mail to the Co-operative at: TREC SolarShare Co-operative (No. 1) Inc. c/o TREC, 401 Richmond Street, Suite 240, Toronto ON M5V 3A8 Attention: Executive Director 3. Any notices so given by mail pursuant to this paragraph shall be deemed to have been given on the day of mailing. 68

70 The following are Events of Default: Schedule A to Trust Agreement Events of Default 1. If the Co-operative makes default in payment of the principal or interest on any Solar Bond or Note, or obligation under the TREC Agreements when the same becomes due, and such default continues for 10 days; 2. If the Co-operative defaults in the observance of any of the covenants in a Solar Bond or Note, or obligation under the TREC Agreements; 3. If an order shall be made or a resolution passed for the winding up or liquidation of the Co-operative; 4. If the Co-operative shall make a general assignment for the benefit of its creditors or a proposal under the Bankruptcy and Insolvency Act (Canada), or shall be declared, or if a custodian or receiver and manager shall be appointed of the Co-operative or of any of the Leases and Equipment of the Co-operative; 5. If a creditor or encumbrancer of the Co-operative shall take possession of any of the Leases and Equipment of the Co-operative; 6. If a default shall occur under any obligation of the Co-operative to repay borrowed money and such default shall continue for a period sufficient to permit the acceleration of the maturity of such obligation; and 7. If the Co-operative shall neglect to carry out or observe any covenant or condition in this Agreement, and, after notice in writing has been given by the Trustee to the Co-operative specifying such default and requiring rectification thereof, the Co-operative shall fail to make good such default within a period of 10 days 69

71 Schedule B to Trust Agreement Procedures for Meetings of Bondholders 1. Right to Convene Meeting -- The Trustee shall, on the request of the Co-operative, a Bondholder, or a Noteholder, convene a meeting of the Bondholders and Noteholders on ten days notice in the manner provided for in paragraph 0 of the Trust Agreement. In the event the Trustee fails, within five days after receipt of a request, to give notice convening such meeting, the Co-operative or such Bondholder or Noteholder, as the case may be, may convene such meeting. Every such meeting shall be held at such place as may be determined by the party calling the meeting. 2. Chair -- A person, who need not be a Bondholder, or a Noteholder, nominated by the party calling the meeting, shall chair the meeting and if no person is so nominated, those present shall choose person present at the meeting to be the chair. 3. Power to Adjourn -- The chair of any meeting may, with the consent of the holders of a majority in principal amount of the Solar Bonds or Notes represented there, adjourn any such meeting and no notice of such adjournment need be given except such notice, if any, as the meeting may prescribe. 4. Show of Hands -- Every question submitted to a meeting shall be decided in the first place by the votes given on a show of hands, unless a poll is requested by any Bondholder, or Noteholder. At any such meeting, unless a poll is requested, a declaration by the chair that a resolution has been carried or carried unanimously or by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact. 5. Poll -- When a poll is requested on any question submitted to a meeting, either before or after a vote by show of hands, it shall be taken in such manner as the chair shall direct. 6. Proxies -- The Trustee may make rules for voting by proxy and the form of the instrument appointing a proxy. 7. The Co-operative and Trustee may be Represented -- The Co-operative, by its officer or director, the Trustee, and the legal advisors of the Co-operative and the Trustee, may attend any such meeting, but shall have no vote. 70

72 Schedule C Form of 5-Year Solar Bond (Simple Interest) [front] TREC SolarShare Co-operative (No. 1) Inc. (Incorporated under the Ontario Co-operative Corporations Act) Member Name: <<Member Name>> Bond No. <<Certificate Number>> Principal Sum: $<<Total Bond>> Date: <<Effective Date>> Maturity Date: <<Maturity Date_Bond>> Interest Rate: <<Rate_Bond>> on <<Term Words_Bond>>year term Solar Bonds For value received, TREC SolarShare Co-operative (No. 1) Inc. acknowledges itself indebted and promises to pay, in Canadian money, to the Member, on the Maturity Date, the Principal Sum above and to pay interest on that amount, upon and subject to the terms and conditions set out on the reverse side. TREC SolarShare Co-operative (No. 1) Inc. This Bond is one of the Bonds referred to in the Trust Agreement. Per: Brian Iler, Trustee [Back] 1. Interest Interest shall accrue on the balance from time to time outstanding of the Principal Sum at the specified rate per year, calculated semi-annually in arrears. Interest will be paid on or before the 15th day of June and the 15th day of December each year. How and to Whom Payments to be Made The person in whose name this Bond is registered in the records of TREC SolarShare Co-operative (No. 1) Inc. (SolarShare) will be regarded as the owner of the Bond and any payments made pursuant to this Bond will be made only to or upon the order in writing of such person. Payments on account of the Principal Sum or interest, at maturity or a redemption date or an interest payment date, will be paid, if instructed by the Member, directly deposited to the account of the Member, or, otherwise, by cheque drawn on SolarShare and sent by pre-paid mail to the Member at the address of the Member contained in the records of SolarShare. If the date for payment of any amount of the Principal Sum or interest is not a business day, then payment will be made on the next business day and the Member will not be entitled to any further interest or other payment in respect of the delay. 71

73 2. Prepayment The Principal Sum may be prepaid by SolarShare at its option, in whole or in part, at any time, without penalty, but including interest accrued to the date of prepayment. 3. Security This Bond and all other similar bonds issued by SolarShare are secured by a mortgage in favour of the Trustee for the benefit of all members of SolarShare who are holders of similar bonds to this Solar Bond, on the leasehold properties and equipment held by SolarShare, on the terms set out in a Trust Agreement dated September 1, A copy of that agreement has been delivered to the Member. 4. Defaults Subject to paragraph 6, the Principal Sum shall become immediately due and payable at the option of the Member without presentment, demand, notice of dishonour, protest or notice of protest in respect of this Solar Bond, upon the occurrence of any one or more of the following events: 1. A failure of SolarShare to make any payment required to the Member when due; or 2. SolarShare shall become insolvent or bankrupt or ceases paying its debts as they mature or shall make an assignment for the benefit of creditors; or 3. A trustee, receiver or liquidator shall be appointed for SolarShare for a substantial part of the property of SolarShare under the laws of any jurisdiction and the appointee of such proceedings shall not have been discharged within sixty days of the appointment or institution of proceedings. 5. When Principal Repayment May Be Delayed To address concerns that Debt Financing lenders may raise in light of possible future market interest rate fluctuations, principal repayment may not occur until replacement capital is obtained. 6. Transfer No transfer or assignment of this Solar Bond shall be valid without the prior written approval of SolarShare. 7. Successors The provisions of this Solar Bond shall ensure to the benefit of and be binding on the Member and SolarShare, and, as applicable, their respective any successors, heirs, administrators and/or legal or personal representatives. 8. Discharge and Satisfaction Upon payment by SolarShare to the Member of all monies due and payable hereunder, this Bond shall cease and become null and void and the Member shall upon request and the expense of SolarShare execute and deliver to SolarShare a full release and discharge. 9. Notice 72

74 Any notice required or permitted to be given to any party to this Solar Bond shall be given in writing and shall be delivered personally or mailed by prepaid regular mail. Any such notice shall be conclusively deemed to have been given and received on the day on which it is delivered, if personally delivered, or if mailed, on the second business day immediately next following the date of mailing, and addressed, in the case of SolarShare to 401 Richmond Street West, Suite 240, Toronto Ontario M5V 3A8, Attention: General Manager, and in the case of the Member to the Member s latest address as shown in the records of SolarShare. The foregoing information can be changed by giving a notice in accordance with the requirements set out in this Section. 73

75 Schedule D Form of 15-Year Solar Bond TREC SolarShare Co-operative (No. 1) Inc. 15-Year Solar Bond: 15 year self-amortizing bond with principal repayments commencing six months after date of issue Name of Bondholder: <<Member Name>> Principal Sum: $<<Total_BondA>> Date of Bond: <<Effective Date>> Maturity Date: <<Maturity Date_BondA>> Principal Repayments Starting Date: Six months after Date of Bond Bond Number: <<Certificate Number>>A 1. Promise to Pay For value received, TREC SolarShare Co-operative (No. 1) Inc. (the Co- operative) acknowledges itself indebted and promises to pay, in Canadian money, to the Bondholder, by the Maturity Date, at a rate of 6% per annum beginning on the Principal Repayments Starting Date, the Principal Sum above and to pay interest semi-annually on the outstanding principal amount as set out below, upon and subject to the terms and conditions below. 2. Series This Bond is one of a series of bonds, all of which are secured pursuant to the provisions of a trust agreement, a copy of which has been made available to the Bondholder. 3. Interest Interest shall accrue on the balance from time to time outstanding of the Principal Sum at the rate of 6% per annum, calculated semi-annually (equivalent to 6.09% calculated annually). 4. Payments Each semi-annual payment shall be an equal blended amount of interest and principal resulting in full repayment of principal by the Maturity Date.. By way of example, for a principal sum of $1000, the semi-annual payment would be $ How and to Whom Payments to be Made 5.1 The person in whose name this Bond is registered in the records of the Co- operative will be regarded as the owner of the Bond and any payments made pursuant to this Bond will be made only to or upon the order in writing of such person. 5.2 Payments on account of the Principal Sum or interest, at maturity or a redemption date or an interest payment date, will be paid by cheque drawn on the Co-operative and sent by pre-paid mail to the Bondholder at the address of the Bondholder contained in the records of the Co- or deposited directly into the Bondholder's account with the information provided by the Bondholder if such an arrangement has been made. 5.3 If the date for payment of any amount of the Principal Sum or interest is not a business day, then payment will be made on the next business day and the Bondholder will not be entitled to any further interest or other payment in respect of the delay. 6. Rank of Bonds 74

76 This Bond and all other bonds secured by the Trust Agreement shall rank rateably without discrimination, preference or priority. However, for those projects under construction, in which the proceeds of Bonds have not yet been applied to repay the construction financing, in the event of default, that project s realizable assets would be applied first to repay the construction financing, and thereafter, to repay the bonds. 7. Security This Bond issued by the Co-operative are secured by a mortgage on the property of the Cooperative in favour of the Trustee for the benefit of all members of the Co-operative who are holders of similar bonds to this Bond, on the leasehold properties and equipment held by the Cooperative, on the terms set out in a Trust Agreement dated October 29, A copy of that agreement has been delivered to the Member. 8. Events of Default The following are events of default (referred to as an Event of Default): a. If the Co-operative makes default in payment of the Principal Sum or interest when the same becomes due and such default continues for 30 days; b. If an order is made or a resolution passed for the winding up or liquidation of the Cooperative; c. If the Co-operative makes a general assignment for the benefit of its creditors or a proposal under the Bankruptcy and Insolvency Act (Canada), or if it is declared bankrupt, or if a receiver and manager of the Co-operative or of the property of the Cooperative that is a substantial part of such property is appointed; d. If a creditor or encumbrancer of the Co-operative takes possession of the property of the Co-operative or any part of the property that is a substantial part of such property; and If a default occurs under any obligation of the Co-operative to repay borrowed money and such default shall continue for a period sufficient to permit the acceleration of the maturity of such obligation. 9. Enforcement Upon the occurrence and during the continuance of any Event of Default, the Trustee shall take such enforcement proceedings on behalf of the Bondholders as the Trustee may determine, or the Bondholders may decide, to realize on the security held by the Trustee. The Bondholder may proceed to enforce his/her rights by any action, suit, remedy or proceedings authorized or permitted by law or by equity, and may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have his / her claim lodged in any bankruptcy, winding-up or other judicial proceeding relative to the Co-operative. Such rights of the Bondholder shall be in addition to any other rights, powers and remedies which otherwise may be available to him/her at law or in equity. 10. Discharge and Satisfaction Upon payment by the Co-operative to the Bondholder of all monies due and payable hereunder, 75

77 this Bond shall cease and become null and void and the Bondholder shall upon request and the expense of the Co-operative execute and deliver to the Co- operative a full release and discharge. 11. Notice Any notice required or permitted to be given to any party to this Bond shall be given in writing and shall be delivered personally or mailed by prepaid regular mail. Any such notice shall be conclusively deemed to have been given and received on the day on which it is delivered, if personally delivered, or if mailed, on the second business day immediately next following the date of mailing, and addressed, in the case of the Co-operative to: TREC SolarShare Co-operative (No. 1) Inc. 401 Richmond Street West, Suite 240 Toronto, ON M5V 3A8 and in the case of the Bondholder to the Bondholder s latest address as shown in the records of the Co-operative. The foregoing information can be changed by giving a notice in accordance with the requirements set out in this Section. 12. Mutilation, Loss etc. If this Bond shall become mutilated, lost, destroyed, or stolen, then the Co-operative shall, upon the written request of the Bondholder, issue a new Bond of like date and tenor upon surrender and cancellation of the mutilated Bond or, in the case of a lost, destroyed or stolen Bond, in lieu of and in substitution for the same, provided that in the case of loss or destruction or theft, the Bondholder shall furnish to the Co-operative such evidence of such loss or destruction or theft as shall be satisfactory to the Co-operative in its discretion and shall also furnish to the Co-operative an indemnity in form satisfactory to the Co-operative. 13. Transfer No transfer or assignment of this Bond shall be valid without the prior written approval of the Cooperative. Where the Bondholder has given notice to the Co- operative that he/she needs, or desires, to be repaid, the Co-operative shall use commercially reasonable efforts to repay the sums owing under this Bond within six months of receiving such notice. 14. Successor The provisions of this Bond shall enure to the benefit of and be binding on the Bondholder and the Co-operative, and, as applicable, their respective any successors, heirs, administrators and/or legal or personal representatives. 15. Governing Law This Bond shall be governed by, and construed and enforced in accordance with, the laws of the Province of Ontario and the laws of the Dominion of Canada applicable therein, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction. 76

78 Schedule E SolarShare By-laws ORGANIZATIONAL BY-LAW of TREC SolarShare Co-operative (No. 1) Inc. incorporated under the Co-operative Corporations Act [Includes amendments confirmed on June 18, 2014] ORGANIZATIONAL BY-LAW of TREC SolarShare Co-operative (No. 1) Inc. The following is enacted as a By-law of TREC SolarShare Co-operative (No. 1) Inc. (the Co-operative): 1. REQUIREMENTS OF CO-OPERATIVE CORPORATIONS ACT 1.1 Co-operative Corporations Act The affairs of the Co-operative will be governed and conducted in accordance with the Co-operative Corporations Act of Ontario (the Act). Certain provisions of that Act relate to various matters not dealt with in the by-laws of the Co-operative and should be consulted where appropriate. If any conflict arises between the mandatory provision of the Act and the by-laws of the Co-operative, such provisions of the Act shall govern. 1.2 Records Pursuant to the Act, copies of the following documents shall be kept at the head office of the Co-operative: a. A copy of the Articles of Incorporation; b. All by-laws; c. A register of members and security holders in which is set out the information required by the Act (Section 114, paragraph 3 of the Act); d. A register of directors in which is set out he names and the resident addresses while directors, including the street and number, if any, of all persons who are or who have been directors the Co-operative with the several dates on which they have become or ceased to be directors; e. All accounting books and documents (Section 114, paragraph 5 of the Act); f. The minutes of all meetings of members, directors and any executive or other committee; and g. A register of transfers of securities These records shall be available for examination by any director and, with the exception of accounting records and minutes of proceedings at meetings of directors and any committee, by members and creditors of their agents or personal 77

79 representatives during normal business hours for purposes consistent with the good faith exercise of membership rights and responsibilities in the Co-operative. 2. MEMBERSHIP 2.1 Qualifications of Membership - The board of directors may admit as a new member of the Co-operative, a person who is a resident of Ontario, and has paid the membership fee established by resolution of the board of directors from time to time. 2.2 Benefits of Membership Members shall enjoy the following rights of membership: a. The right to vote at annual and special meetings of members; b. All rights of members otherwise set out in the Act, the articles and by-laws of the Co-operative 2.3 Transfer of Membership Membership is transferable upon Board approval and is subject to a $50 transfer fee. 2.4 Withdrawal A member of the Co-operative may withdraw from membership by giving to the Secretary 6 months notice of her/his intention to withdraw, and upon approval of the board. 2.5 Expulsion -- A member of the Co-operative may be expelled from the membership by the directors in accordance with Section 66 of the Act. 2.6 Automatic Termination If a member ceases to be qualified for membership pursuant to paragraph 2.1 that person automatically ceases to be a member. 2.7 Agreement to Comply with By-Laws Upon becoming a member of the Cooperative, a person is deemed to have entered into an agreement with the Cooperative to comply with and be bound by the by-laws of the Co-operative, as amended from time to time. 2.8 Confidentiality Upon being admitted to membership in the Co-operative, members are deemed to have entered into a confidentiality agreement with the Co-operative and shall not disclose to third parties any information pertaining to the Co-operative which, directly or indirectly, o Could be prejudicial to the interests of the Co-operative, o Could place the Co-operative at a competitive disadvantage with respect to existing or potential competitors, or o Could cause material damage to the reputation or image of the Co-operative or the Co-operative s products 2.9 Except for information which is generally known, other than as a result of a disclosure in breach of this paragraph, is rightfully in the possession of a member prior to the date when the information was disclosed to the member by the Co- 78

80 operative or becomes available to the member on a non-confidential basis from a source which is not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. 3. MEETINGS OF MEMBERS 3.1 Annual Meetings the annual meeting of the members shall be held within 6 months of the financial year-end, December 31 st, and within 15 months of any previous annual meetings. The board of directors shall fix the date, time and location of the annual meeting. The annual meeting shall be held for the purpose of electing the directors, receiving the financial statements and any auditor s report thereon, and the transaction of any other business that may properly be brought before an annual meeting of the members. 3.2 Special Meetings Other meetings of the members may be called by order of the President, Vice-President or the directors, or by written requisition of 5% of the members in accordance with the Act, at any time and at any place within the province of Ontario, and the Secretary shall send the requisite notice of such meeting to members of the Co-operative at any place within the province of Ontario fixed by the person or persons calling the meeting. 3.3 Business Transacted At meetings of the members, only the business stated in the notice calling such a meeting may be transacted. 3.4 Record Date the board of directors may fix in advance a record date preceding the date of any meeting of members for the determination of the members and bondholders shall receive notice of the meeting. The date shall not be more than three business days prior to the date on which the notice of the meeting is given, and not more than 50 days before the date of the meeting. 3.5 Notice of Meetings A written notice of each annual or special membership meeting stating the time, place and purpose shall be posted in the place of business and shall be given by the Secretary at least ten days but no more than 50 days before the meeting, to each member and to the auditor (if any) of the Cooperative. 3.6 Where Notice Not Required No notice of any annual or other meetings of the members shall be necessary: a. Where all members entitled to vote at such a meeting and all bond holders, are present in person, and in the case of an annual meeting, consent to the transaction of the business, or in the case of any other meeting, consent to the transaction of the business for which such meeting is being held; or b. Where all members entitled to vote at such meeting who are not present in writing and all bond holders, waive notice of the meeting, on in the case of a meeting other than the annual meeting, notice of the meeting and the purpose for which it is being held. 79

81 3.7 One Member One Vote Each member at a meeting is entitled to one and only one vote on any matter requiring a vote of the members. 3.8 Corporate Proxy A corporate member may appoint one of its directors of officers to attend and vote on its behalf at meetings of members. No other members of a Co-operative may vote by proxy. 3.9 Quorum A quorum for any meeting of the members shall be 25 members, or 10% of the members, whichever is lesser. No business shall be transacted at any meeting unless the requisite quorum is present Voting Except as required by these by-laws or the Act, questions arising at any meeting of members shall be decided by a majority of votes. Any questions shall be decided by a show of hands or by telephone and/or online votes unless, prior to any vote, a member requests a ballot. A ballot shall be taken in such manner as the Chair of the meeting shall direct. The Chair, as a member, may exercise his/her vote on a question, and shall not have a second vote in the event of a tie Presiding Officer The President or other designee, as determined by the board of directors, shall preside at membership meetings. However, if at a meeting the board s designee is not present within 15 minutes after the time appointed for the holding of the meeting, the members present shall choose a person from their number to be the chair, provided a quorum is present Adjournment If a meeting of members is adjourned for less than 30 days, it shall not be necessary to give notice of the adjourned meeting other than by an announcement at the meeting that is adjourned. If a meeting of members if adjourned by one or more adjournments for a total of 30 days or more, notice of the adjourned meetings shall be given as for the original meeting Electronic Participation A member may participate in a meeting of the members by means of such telephone, electronic or other communications facilities as permit all persons participating in the meeting to communicate with each other, simultaneously and instantaneously, and a member participating in such a meeting by such means is deemed to be present at the meeting. 4. BOARD OF DIRECTORS 4.1 Powers The board of directors shall manage or supervise the management of the affairs and business of the Co-operative. 4.2 Qualifications Each director shall be at least 18 years of age, and a member of the Co-operative (or, if the member is a corporation, he or she is a director, officer, bondholders or member of that corporate member), and shall not be an undercharged bankrupt or a mentally incompetent person. All directors shall be residents of Ontario. 80

82 4.3 Election and Size -- The board of directors shall consist of a minimum of four and a maximum of nine directors (the exact number to be determined from time to time by the directors) who shall be elected for a term of three years, arranged so that one-third of the directors are elected each year. Directors shall be eligible for re-election upon completion of their term, 4.4 Tenure -- Except as otherwise provide by law, by the articles, or by these by-laws, directors shall hold office until their successors are elected. 4.5 Nominations -- At a meeting where directors are to be elected, the meeting, before nominations are called for, shall choose its chair for the purpose of conducting the elections. Nominations shall be on an individual basis and the chair shall not accept a blanket motion to elect directors until after nominations have been closed. 4.6 Election -- Every member entitled to vote at an election of directors, if she/he votes, shall cast a number of votes equal to the number of directors to be elected, and the member shall distribute the votes among the candidates in such a manner as she/he sees fit, but no candidate shall receive more than one vote from each member. 4.7 Vacation of Office -- The office of a director shall be vacated: a. if she/he ceases to have the necessary qualifications for office; b. if she/he is absent without leave of the directors for three consecutive regular meetings of the directors; c. if by notice in writing to the Co-operative she/he resigns her/his office, or d. if by resolution passed by a majority of the votes cast at a meeting of the members called for that purpose, she/he is removed from office; e. if he/she dies. 4.8 Vacancy -- Whenever any vacancy occurs on the board of directors, provided a quorum of directors remains in office, the directors may appoint a director to fill such vacancy, to serve for a term ending on the date of the next annual general meeting. 4.9 Meetings of Directors -- Regular meetings of the directors shall be held as often as the business of the Co-operative may require but in any event not less than quarterly The co-operative will indemnify all directors and officers, and their heirs and legal personal representatives, to the maximum extent permitted by section 110 of the Act. 81

83 5. OFFICERS 5.1 Election and Appointment -- The directors shall annually or as often as may be required, elect a President, and elect or appoint a Vice-President, a Secretary, and a Treasurer. None of the said officers, except the President, need be a member of the board of directors. Any two of these offices may be held by the same person, except those of the President and Vice President. The directors may from time to time elect or appoint such other officers and agents as they shall deem necessary who shall have such authority and shall perform such duties as the directors from time to time shall prescribe. 5.2 Remuneration and Removal -- The remuneration of all officers elected or appointed by the directors shall be determined from time to time by resolution of the directors. The fact that any officer or employee is a director or member of the Co-operative shall not disqualify her/him from receiving remuneration as may be determined. All officers, in the absence of agreement to the contrary, shall be subject to removal by resolution of the directors at any time, with or without cause. 5.3 Delegation -- In the case of the absence or inability to act of the President, Vice-President or any other officer of the Co-operative or for any other reason that the directors may deem sufficient, the directors may delegate all or any of the powers of such officer to any other officer or to any director for the time being, provided that a majority of directors concur therein. 5.4 Duties of President -- The President shall, if present, preside at all meetings of members and directors. She/he shall sign all instruments which require her/his signature and shall perform all duties incident to her/his office and shall have such other powers and duties as may from time to time be assigned to her/him, by the directors. 5.5 Duties of Vice-President -- In the absence or disability or refusal to act of the President, the Vice-President shall be vested with all the powers and she/he shall perform all the duties of the President. 5.6 Duties of Secretary -- The Secretary shall issue or cause to be issued notices for all meetings of the members and directors when directed to do so, and shall keep or cause to be kept all records required by paragraph 1.2 of these by-laws. She/he signs with the president or other signing officer or officers of the Co-operative such instruments as require her/his signature and shall perform such other duties as the terms of her/his engagement call for or the directors may from time to time require of her/him. 5.7 Duties of Treasurer -- The Treasurer shall have the care and custody of all the funds and securities of the Co-operative and shall deposit the same in the name of the Co-operative in the financial institutions designated pursuant to paragraph 8.2. She/he shall keep or cause to be kept proper accounting records in accordance 82

84 with the Act. She/he shall at all reasonable times exhibit, or cause to be exhibited, books and accounts to any director upon application at the office of the Co-operative during business hours. She/he shall sign such instruments as require her/his signature and shall perform all other duties incident to her/his office or that are properly required of her/him by the directors. She/he shall be required to give such bond as directors may require. No director shall be liable for failure to require any bond or for the insufficiency of any bond or for any loss by reason of the failure of the Co-operative to receive any indemnity thereby provided. The Treasurer may delegate any or all of his/her duties to other officers, or to staff of the Co-operative. 5.8 General Manager -- The directors may from time to time appoint a general manager who shall not be one of the directors of the Co-operative and may delegate to her/him full authority to manage and direct the affairs of the Co-operative (except such matters and duties as by law must be transacted or performed by the directors or by the members in general meeting), and to employ, discharge, and fix wages or salaries of employees of the Co-operative. The general manager shall at all reasonable times give to the directors or any of them all information they require regarding the affairs of the Co-operative. 5.9 Vacancy -- An officer s position shall become vacant by reason of death, resignation, disqualification or removal, the directors by resolution may elect or appoint an officer to fill such vacancy. 6. ASSET LOCK 6.1 Any profits or accretions to the value of the property of the Co-operative shall be used to further its activities. 6.2 The Co-operative cannot be converted into or continued as any other kind of corporation and no attempt to do so is effective. 6.3 The Co-operative shall not distribute or pay any of its property to its members during its existence or on its dissolution. 6.4 Despite the above, the Co-operative may pay a member reasonable amounts for goods or services provided by the member. 6.5 No person shall accept compensation for the withdrawal of its membership in the Co-operative. 6.6 The Co-operative may not amalgamate except with another asset-locked corporation. 6.7 In the event of dissolution, the assets of the Co-operative after payment of all the debts and liabilities of the Co-operative shall not be distributed among members but shall be distributed to a non-profit co-operative with similar restrictions on the application of its funds to those set out in this Article 6. 83

85 6.8 Any amendment to the Articles or by-laws of the Co-operative that would have the effect of amending this Article 6 shall be authorized by a special resolution passed by 95% of the voting members in attendance at a duly called meeting of members, and a majority of the members of each membership class. 7. BOND AND LOAN CERTIFICATES 7.1 Bondholder s Entitlement -- Every bondholder or lender is entitled to a bond certificate in respect to the bonds held or loans made by him/her. 7.2 Signatures -- Each bond or loan certificate shall bear two signatures, one of which shall be the manual signature of an officer of the Co-operative. The other signature will be that of another officer of the Co-operative, and may be printed, engraved, lithographed or otherwise mechanically reproduced on the certificate. 7.3 Loss of Certificate -- In the case of loss, defacement or destruction of a certificate held by a member, the Act of such loss, defacement or destruction shall be reported by such member to the Co-operative with her/his statement verified by oath or statutory declaration as to the loss, defacement or destruction and the circumstances attending the same and with her/his request for the issuance of a new certificate to replace the one so lost, defaced or destroyed. Upon giving to the Co-operative a bond of a surety company or other security approved by the directors indemnifying the Co-operative against all loss, damage or expense to which the Co-operative may be put by reason of the issuing of a new certificate held by a bondholder or lender, a new certificate may be issued to take the place of the one lost, defaced or destroyed if such issuance is ordered by the President for the time being or by the directors. 7.4 Transfer of Certificates -- Bond and loan certificates shall not be transferable without the consent of the directors, except as permitted by the articles of the Cooperative. 7.5 Interest on member loans Interest on member loans required as a condition of membership shall be 2% above the prime rate of Luminous Financial or its successor, compounded annually. 8. FINANCIAL 8.1 Cheques -- All cheques, drafts or other orders for the payment of money and all notes and acceptances and bills of exchange shall be signed by such officer or officers or person or persons whether or not officers of the Co-operative and in such manner as the directors may from time to time designate. 8.2 Banking Arrangements -- The banking business of the Co-operative shall be transacted in such banks, trust companies, credit unions or caisse populaires as may from time to time be designated by resolution of the board of directors. Such banking business or any part thereof shall be transacted under such agreements, 84

86 instructions, and delegations of power as the directors may from time to time prescribe or authorize by resolution. 8.3 Custody of Securities -- All bonds and securities owned by the Co-operative shall be placed for safe keeping (in the name of the Co-operative) with a credit union, chartered bank or trust company, or the Province of Ontario Savings Office, or with such other corporation as may be determined from time to time by the directors. 8.4 Dishonesty -- For the Co-operative s protection, either a. the Co-operative shall maintain fidelity insurance in such amounts as reasonably protects it against dishonesty of its employees, or b. every officer or employee of the Co-operative who has charge of or handles money or securities belonging to the Co-operative shall be bonded with a surety company selected by directors for such amounts as may from time to time be prescribed by the directors, but in no case for an amount less than $1, The directors may prescribe that any other employee or employees of the Co-operative (whether handling money or securities of the Co-operative or not) shall be bonded in such an amount as the directors determine. 8.6 Financial Year -- The financial year of the Co-operative shall terminate on the last day of December in each year. 8.7 Dissolution -- In the event of dissolution of the Co-operative, after payment of all its debts and liabilities the remaining property of the Co-operative shall distributed as stated in the Articles as amended. 9. AUDITORS 9.1 Appointment and Remuneration -- The members at each annual meeting shall appoint an auditor, when it is required by the Act, who is familiar with co-operative accounting and practice. The auditor when appointed shall hold office until the next annual meeting, and if an appointment is not made, the auditor in office shall continue until a successor is appointed. The remuneration of the auditor shall be fixed by the directors. 9.2 Access to Books and Information -- The auditor shall at all reasonable times have access to the books, accounts and vouchers of the Co-operative and may require from the directors and officers such information and explanations as may be necessary for the performance of her/his duties. 9.3 Report -- The auditor, if required by the Act or the Treasurer, shall make a report to the members on the financial statements to be laid before the Co-operative at each annual meeting during her/his term of office and shall state in her/his report whether in her/his opinion the financial statement referred to therein presents fairly 85

87 the financial position of the Co-operative and the results of its operation for the period under review. 10. EXECUTION OF DOCUMENTS 10.1 Execution of Documents -- Aside from cheques (see paragraph 8.1) documents requiring the signature of the Co-operative may be signed by any 2 of the directors, officers and/or staff members who have been given signing authority by the directors. All documents so signed shall be binding upon the Co-operative without any further authorization or formality. The directors shall have power from time to time by resolution to appoint any officer or officers, person or persons to sign documents generally or to sign specific contracts, documents and instruments in writing on behalf of the Co-operative. 11. NOTICES 11.1 Signatures -- The signatures on any notice to be given by the Co-operative may be written, stamped, typewritten, printed or affixed electronically Method of Giving -- Any notice to be given (which term includes sent, delivered, or served) pursuant to the Act, the regulations under the Act, the articles, the by-laws, or otherwise to a member, bondholder, director, officer, auditor, secretary or general manager or member of a committee of the board of the Co-operative shall be sufficiently given if delivered personally to the person to whom it is to be given, mailed to him at his latest address in the records of the Co-operative by prepaid mail, or sent to that person at his/her latest recorded fax or electronic address in the records of the Co-operative by fax or Deemed Receipt -- A notice delivered personally shall be deemed to have been given when it is delivered to the recorded address as stated above. A mailed notice shall be deemed to have been given on the fifth day after it is deposited in a post office or public letter box, unless there is a reasonable apprehension of a labour dispute which would interrupt mail delivery. A notice sent by means of facsimile transmission or shall, if sent during normal business without indication of failure, be deemed to have been given at the time of transmission or, if outside of such business hours, on the next following business day More Than One Name -- All notices with respect to any membership bonds or loans registered in more than one name shall be given to whichever of the persons is named first in the books of the Co-operatives and notice so given shall be sufficient notice to all holders of such bond or loan Undelivered Notices -- If any notice given to a member pursuant to paragraph 11.2 above is returned on three consecutive occasions because he cannot be found, the Co-operative is not required to send any further notices to such member until the member informs the Co-operative in writing of his/her new address. 86

88 11.6 Omissions and Errors -- The accidental omission to give any notice to any member, director, officer, auditor or member of a committee of the board, or the non-receipt of any notice by any such person, or any error in any notice not affecting the substance thereof shall not invalidate any action taken at any meeting held pursuant to such notice Transfer of Loans -- Every person who by operation of law, transfer or by other means whatsoever shall become entitled to any bond or loan shall be bound by every notice in respect of such bond or loan which previous to her/his name and address being entered on the books of the Co-operative was duly given to the person from whom she/he derives her/his title to such bond or loan Certificate of Secretary -- A certificate of the Secretary or other duly authorized officer of the Co-operative in office at the time of the mailing of the certificate, as to facts in relation to the giving of notice to any member, director or officer shall be conclusive and binding on every member, director or officer of the Co-operative as the case may be Waiver of Notice -- Where a notice is required to be given by the Act, the regulations under the Act, the articles, the by-laws, or otherwise, the giving of the notice may be waived or the time for the notice may be waived or abridged with the consent in writing of such person, whether before or after the time prescribed. 12. GENERAL 12.1 Head Office -- The head office of Co-operative shall be located in the City of Toronto in the Province of Ontario, and at such place there as the directors may from time to time determine By-Law Amendments -- Except as set out in paragraph 6.8 any by-law of the Cooperative may be enacted or changed by a decision by the Board, confirmed by a two-thirds majority of the votes cast at a general meeting of the members, properly called to make such changes. All by-law changes proposed will be included in the notice of the meeting at which the change will be decided upon Interpretation -- In all by-laws of the Co-operative, the singular shall include the plural and the plural the singular; the masculine shall include the feminine; the word "person" shall include firms and corporations. Whenever reference is made in this by-law to any statute or section thereof, such reference shall be deemed to extend and apply to any amendment to said statute or section, as the case may be. 87

89 BY-LAW NUMBER 2 a by-law authorizing borrowing and pledging by TREC SOLARSHARE CO-OPERATIVE (NO. 1) INC. (the Co-operative) BE IT ENACTED as a by-law of Co-operative, as follows: 1. The directors of the Co-operative may from time to time, without authorization of the members: a. borrow money upon the credit of the Co-operative by obtaining loans or advances or by way of overdraft or otherwise; b. issue, sell or pledge securities of the Co-operative including bonds, debentures, debenture stock, for such sums on such terms and at such prices as they may deem expedient; c. give guarantee on behalf of the Co-operative to secure the performance of an obligation of any person; d. assign, transfer, convey, hypothecate, mortgage, pledge, charge or give security in any manner upon all or any of the real or personal, movable or immovable property, rights, powers, choses in action, or other assets, present or future, of the Co-operative to secure any such securities or other securities of the Co-operative or any money borrowed or to be borrowed or any obligations or liabilities as aforesaid or otherwise of the Co-operative heretofore, now or hereafter made or incurred directly or indirectly or otherwise; and e. without in any way limiting the aforesaid powers, to give security or promises to give security, agreements, documents and instruments in any manner or form under the Bank Act or otherwise to secure any money borrowed or to be borrowed or any obligations or liabilities as aforesaid or otherwise of the Co-operative heretofore, now or hereafter made or incurred directly or indirectly or otherwise. 2. Any or all of the foregoing powers may from time to time be delegated by the directors to any one or more of the officers of the Co-operative. 3. This By-law shall remain in force and be binding upon the Co-operative as regards any person acting on the faith thereof until such person has received written notification from the Co-operative that this By-law has been repealed or replaced. 4. The Co-operative may borrow money from its members not being loans made as a condition of membership or as compulsory loans of patronage returns, in such amounts payable on demand or at such times and either without interest or with interest at such rate as the directors may by resolution determine. 88

90 Schedule F SolarShare 2017 Audited Consolidated Financial Statements 89

91 TREC SOLARSHARE CO-OPERATIVE (NO.l) INC. FINANCIAL STATEMENTS DECEMBER 31, 2017

92 TREC SOLARSHARE CO-OPERATTVE (NO.l) rnc. FINANCIAL STATEMENTS DECEMBER 31, 2017 INDEX PAGE Independent Auditors' Report Statement of Financial Position Statement of Operations and in Changes in Net Assets (Deficiency) Statement of Cash Flows Notes to the Financial Statements

93 37 Main Street Toronto, Ontario M4E 2V5 Tel Fax. PROFESSIONAI ACCOUNTANTS Web Page: Page 1 INDEPENDENT AUDITORS' REPORT To the members of TREC SolarShare Co-operative (No.1) Inc. Report on the Financial Statements We have audited the accompanying financial statements of TREC SolarShare Co-operative (No.1) Inc., which comprise the statements of financial position as at December 31, 2017 andthe statements of operations and changes in net assets (deficiency) and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management's Responsibilíty þr the Financíal Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian accounting standards for not.for-profit organizations, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or effor. Audítor's Respons ibilíty Our responsibility is to express an opinion on these financial statements based on our audit. \Me conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or enor. In making those risk assesstnents, the auditor considers internal control relevant to the organization's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the organization's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by managernent, as well as evaluating the overall presentation of the financial statements.

94 KRIENS-Lrrlì.OSE. l-l.p CHARTERED PROFES SIONAL ACCOUNTANTS 37 Main Street Toronto, Ontario M4E 2V5 Tel Fax Web Page: Page2 INDEPENDENT AUDITORS' REPORT (Continued) We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial position of TREC SolarShare Co-operative (No.1) Inc. as at December 31, 2017, and the results of its operations and its cash flows for the year then ended in accordance with Canadian accounting standards for no t-for-pro fi t organizati ons. Toronto, Ontario April 27,2018 KRIENS-LAROSE, LLP )"ø1-ul Chartered Professional Accountants Licensed Public Accountants

95 TREC SOLARSHARE CO-OPERATIVE (NO.l) INC. STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31,2017 Page $ 2016 $ CURRENT Cash Accounts receivable Limited partnerships receivable (Note 3) Due from EEDI and GT LP (Note 10) Government remittances receivable Prepaid expenses Inventory Due from QSS (Note6) ASSETS 1,786,92r 439, ,963 1,542,979 16,259 39r,919 37,339 87, , ,232 2,400, , ,233 37,43r 4,467,178 4,485,630 Debt service reserve fund (Note 4) Maintenance reserve fund (Note 4) Projects and equipment (Note 5) 778,090 T5,314 49,049,635 l0l,l32 32,223,943 54,310,217 36,810,705 See accompanying notes to the financial statements

96 TREC SOLARSHARE CO-OPERATTVE (NO.l) rnc. STATEMENT OF FINANCIAL POSITION AS AT DECEMBEP.3I,ZOIT Page $ 20r6 $ CURRENT Accounts payable and accrued liabilities CPC interest payable Government remittances payable Debt financing (Note 8) LIABILITIES 1,124, ,974 89,864 1,743,742 r,903, ,672 33, ,459 3,726,774 2,576,639 LONG-TERM DEBT Due to CPC (Note 7) Debt financing (Note 8) Community solar bonds (Note 9) Due to developers (Note 11) 4,613,341 14,290,696 33,980, ,060 9,103,933 3,433,429 23,378, ,915 57,064,460 38,834,483 NET ASSETS (DEFICIENCY) CONTRIBUTED SURPLUS NON-CONTROLLING INTEREST (Note I 2) UNRESTRICTED NET ASSETS (DEFICIENCY) 30, ,617 48,1 1 8 (2,841,080) (2,094,086) (2,754,243) (2,023,779) 54,31,0,217 36,810,705 APPROVED ON BEHALF OF THE BOARD: Director See accompanying notes to the financial statements Director

97 TREC SOLARSHARE CO-OPERATIVE (NO.l) INC. Page 5 STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS (DEFICIENCÐ FOR THE YEAR ENDED DECEMBER3I,TOIT 2017 $ 20r6 $ REVENUES Generation revenues Membership fees Interest Miscellaneous CEPP grant (Note 13) 4,690,687 8,030 5,729 3,955 4,374,694 7,515 1,207 10,302 7,034 4,708,401 4,400,742 EXPENSES Amortization Bond interest Operations and maintenance Debt financing interest Salaries and wages Project management Interest on notes payable Marketing Professional fees Insurance Bank charges Office and general Travel Bad debts l,ggo,07g 1,497, , , , ,407 19r, ,408 56,310 19,577 12,42r 10,785 l,969 1,575, , , , , , , ,938 75, ,715 2,419 36, ,1 83 5,447,365 4,728,544 (DEFTCTENCY) OF REVENUES OVER EXPENSES FOR THE YEAR NET ASSETS (DEFICIENCY), beginning of year (738,964) (327,802) (2,071,896) (1,744,094) NET ASSETS (DEFICIENCY), end of year (2,810,860) (2,071,896) See accompanying notes to the financial statements

98 TREC SOLARSHARE CO-OPERATTVE (NO.l) rnc. STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 2017 Page $ 2016 $ CASH FROM OPERATING ACTIVITIES Cash receipts from generation revenues Cash receipts from grants Cash receipts from membership fees and other revenue Interest received Cash paid to suppliers 4,806, ,985 5,729 (3,74r,228) 4,331,922 7,034 17,gl7 1,207 (2,467,306) 1,083,263 1,990,674 CASH FROM FINANCING ACTIVITIES Debt financing Bonds payable Advances from (to) QSS Advances from developers Advances from (to) limited partnerships Notes payable r1,699,278 r0,602,022 (87,307) Ill,I45 810,255 (4,490,592) (218,589) 8,772, ,484 (r,182,696) (3,831,409) 18,644,801 3,675,726 CASTI FROM INVESTING ACTIVITIES (Purchase) of equipment (18,805,770) (5,433,002) Change in cash Cash, beginning of year 922, , , ,229 Cash, end ofyear r,786, ,627 See accompanying notes to the financial statements

99 TREC SOLARSHARE CO-OPERATTVE (NO.r) rnc. NOTES TO THE FINANCIAL STATEMENTS DECEMBER3I,2OTT PageT 1. STATUS AND NATURE OF ACTIVITIES TREC SolarShare Co-operative (No. 1) Inc. (the Co-operative andlor SolarShare) is a Non-Profit Co-operative under the Ontario Co-operative Corporations Act. The Co-operative's objective is to promote the development of renewable energy resources in the Province of Ontario. The Co-operative allows Ontarians to invest in solar energy and help to promote its acceptance. Using the co-operative enterprise model, SolarShare provides an investment opportunity in larger solar systems, both rooftop and groundmount, usually hosted on commercial or institutional properties. SolarShare provides triple-bottom line benefits to members by generating profits from local renewable energy projects. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basís of Accountíng The Co-operative has elected to apply the standards in Part III of the Chartered Professional Accountants of Canada (CPAC) Accounting Handbook for Not-For-Profit Organizations (NFPOs) in accordance with Canadian generally accepted accounting principles and includes following significant accounting policies. Consolídation rhe e'**'":*"-lïíliill'ffi:iïü " - l#li" : iå3:;:'ffi3ä:ií,åilíjä?ii'" Ltd roint venture In fiscal year 2016, the Co-operative consolidated the books of the EEDI and GT LP into their statements. Upon review of all agreements, the Co-operative has a right to purchase projects at completion but is not a partner of the LP and only acts as a Lender to the organization. In fiscal year 2017, the EEDI and GT LP is shown as a loan advanced but not consolidated into the financials. Continued..

100 TREC SOLARSHARE CO-OPERATIVE (NO.l) INC. NOTES TO THE FINANCIAL STATEMENTS DECEMBER3T,2OIT Page 8 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Investments ín Joíntly Controlled Actívítíes The Co-operative has entered into partnership agreements with contractorslpartners to develop several renewable energy projects and a joint venture as follows: Name of Joint Arrangement TREC SolarShare and Ontario Ltd Joint Venture EEDI and TREC SolarShare No I LP SolarShare 7o Ownership s0.9% s0.9% The Co-operative uses the equity method for the joint arrangement limited partnerships and consolidation method for the joint venture. Non-controlling interest in the net assets of the consolidated Joint Venture are disclosed separately in equity. Revenue Recognítíon Power Productíon The Co-operative has secured 20 year power purchase agreements at fixed rates per kilowatt hour for all facilities with the Independent Electricity System Operator (IESO) (formerly Ontario Power Authority) under Ontario's Feed-In Tariff (FIT) program, FIT l,fit 2 and FIT 3. Energy Revenue is recognized based on energy produced and delivered to the grid. Revenue is recognized based on energy acknowledged by the Local Distribution Companies (LDCs) as determined by the LDCs meters at periodic dates through the year. Energy produced from the LDCs last meter reading date to the year end is rccognízed based on the Co-operative's meters. There are 10 projects that achieved COD before year end without having been legally closed. Revenue from these projects are recognizd from COD to December 31,2017. Membershíp Fees Membership fees are recognized as revenue when received. Membership fees are not annual as members only pay a one time fee. Therefore the Co-operative seldom records a deferral ofrevenue. Míscellaneous Revenue Miscellaneous Revenue consists of revenue generated from servicing the administrative needs of the Joint Venture, from other small services rendered to industry partners, and as fees charged on early redemptions on bonds. Continued.

101 TREC SOLARSHARE CO-OPERATTVE (NO.l) rnc. NOTES TO THE FINANCIAL STATEMENTS DECEMBER 3I,2OT7 Page9 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) fnturest Revenue Interest revenue is recognized as revenue when eamed. Prepaíd Leases Prepaid leases are amofüzed on a straight-line basis over the life of the lease. Amortízatíon Amortization on energy production assets is charged using the straight line method over 20 years. Amortization commences only after the asset reaches Commercial Operation. Capítal Assets The Co-operative capitalizes all project-related costs incurred costs incurred related to the construction and/or purchase of the project. Those costs include equipment costs, soft costs and related financing charges for each project. The capital assets owned by the Co-operative under the partnerships are accounted for using the equity method and therefore reside in the investment account. This includes the 10 projects referenced in the revenue recognition note where legal ownership was acquired subsequent to year end. The assets were recognized as assets of the Cooperative. Financíøl Instruments (a) Measurement of Financial Instruments The Co-operative initially measures its financial assets and financial liabilities at fair value, except for certain non-arm's length transactions. The Co-operative subsequently measures all its financial assets and financial liabilities at amortized cost, except for investments in equity instruments that are quoted in an active market, which are measured at fair value. Changes in fair value are recognied in net income.. Financial assets measured at arnortized cost include cash, term deposits, accounts receivable and notes receivable. Financial liabilities measured at amofüzed cost include the bank overdraft, the bank loan, accounts payable, amounts due to members and longterm debt. (b) Impairment Financial assets measured at cost are tested for impairment when there are indicators of impairment. The amount of the write-down is recognized in net income. The previously recognized impairment loss may be reversed to the extent of the improvement, directly or by adjusting the allowance account, provided it is no greater than the amount that would have been reported at the date of the reversal had the impairment not been recognized previously. The amount of the reversal is recognized in net income. Continued.

102 TREC SOLARSHARE CO-OPERATIVE (NO.l) INC. NOTES TO TIIE FINANCIAL STATEMENTS DECEMBEF.3I,2OIT Page SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (c) Transaction Costs The Co-operative recognizes its transaction costs in net income in the period incurred. However, the carrying amount of the financial instruments that will not be subsequently measured at fair value is reflected in the transaction costs that are directly attributable to their origination, issuance or assumption. Use of Estímates The preparation of financial statements requires the management to make assumptions about future events that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates the Co-operative uses are: 1. Accrued revenue based on Co-operative's meters 2. Accrued interest payable based on debt instrument involved 3. Accrued site lease expense based on revenue and projected Commercial Operation Date. 4. Accrued audit and insurance recorded based on contracts in place. 5. Projects past commercial operation not yet closed - total Capital Cost for Amortization purpo ses estimated. Actual results could differ from these estimates. 3. LIMITED PARTNERSHIPS ACCOUNTS RECEIVABLE The Co-operative advanced the one limited partnerships $336,658 in the 2017 fiscalyear. In consolidating the limited partnership's 2017 financial statements with the Cooperative's 2017 financial statements 51% - $171,695 of the advances were eliminated as required under consolidation accounting. The balance of $164,963 represents the Cooperatives net investment in the limited partnership. 4. DEBT SERVICE RESERVE FUNDS The debt service reserve fund represents fund held in trust controlled by the Lender, or an institutional trust company as its agent, which may be invested upon direction of CSA1 and CSA2, respectively. Interest earned is recorded as an addition to the reserve fund prinicipal on the CSAI and CSA2 statements. The funds are held as security for the financing provided from the Lenders, as described in Note # 8. Continued...

103 TREC SOLARSHARE CO-OPERATTVE (NO.l) rnc NOTES TO THE FINANCIAL STATEMENTS DECEMBEF.3T,2OIT Page I 1 4. DEBT SERVICE RESERVE FUNDS (Continued) If a project is unable to meet debt service coverage ratio of 1.5:1 as outlined in Note # 8, the Lender will be empowered to access the funds and withdraw a sufficient amount to meet debt payments, operating costs and working capital requirements. Funds in the maintenance reserve fund may be used for major maintenance replacement with the approval of the Lender. CSAI has begun making contributions to the maintenance fund as per the the borrowing agreement. CSA2 will not make contibutions until 2019 as required by the borrowing agreement. CSAl CSA2 Total2017 Total2016 Debt Service Reserve 102, , ,090 l0r,l32 Maintenance Reserve rs.3t PROJECTS AND EQUIPMENT 1 2 Inventory: Inventory parts are accrued at their purchase value and expensed as used. Inventory parts are not amortized. Project Capital Assets Include: a. Equipment Costs: All purchase and construction costs b. Pre COD Interest: Interest accrued on financing prior to Commercial Operation Date. c. Project Costs: Costs relating to project development to COD including loan interest expenses, legal fees, banking fees, staff time, development fees and engineering studies and reports. Capital Assets are described in Appendix 1 6. ADVANCE TO QUEEN STREET SOLAR CO-OPERATTVE (QSS) During the fiscal year, the Co-operative advanced amounts to develop a project owned by Queen Street Solar Co-operative (QSS). As of the year end, after reconciling advances, revenue generated by the site to date, project cost and considering the parties will file an HST Election on closing, $87,307 represents the amount due from QSS to the Cooperative on legal closing. Continued.

104 TREC SOLARSHARE CO-OPERATTVE (NO.l) rnc. NOTES TO THE FINANCIAL STATEMENTS DECEMBER 3T,2OT7 Page COMMUNTTY POWER CAPITAL LOAN (CPC) Type Description Interest rate Repayment terms Security Promissory Note This note payable is payable to the Community Power Capital Co-operative This loan carries an interest rate between 60/o and l0o/o. l0o/orate during the pre-cod phase. From proceeds of sale of Community Solar Bonds or from mortgage proceeds. Solarshare may repay any or all loans at any time without notice or penalty. Floating charge against all assets of the Co-operative which stands in second priority to the bond holders Interest Pool Principal at 6Yo 3,273,002 4,886,462 Principal at t s Total 4"613"341 9.r DEBT FINANCING Both CSA1 and CSA2 have secured long term debt against their respective assets. CSAl CSA2 Tvpe Term loan Term loan Lender Equitable Life Insurance Company ofcanada CorpFinance International Ltd. Interest Rate: 4.789% compounded monthly and payable monthly in arrears. Term: February 20,2015 to Feburary 20, 203r. Repayrnent: Monthly payments of $33, 144 including interest. Security: A fixed charge against all assets of CSAl 5.262% compounded monthly and payable monthly in arrears. September 6,2017 to March 31, Sculpted and declining rate changing June/December each year for the term of the loan as per the arnof üzation s chedule. A first fixed charge and floating charse asainst all assets of CSA2. The credit agreement includes a covenant whereby a debt service coverage ratio (income before interest and amortizationlpnncipal repayments and interest) of 1.5:1 must be maintained. As at December 31,2017, the debt service coverage ratio was I:64:1 and 5:27:l for CSA1 and CSA2, respectively. Continued..

105 TREC SOLARSHARE CO-OPERATTVE (NO.l) INC NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31,2017 Page l3 8. DEBT FINANCING (Continued) CSAl Loan 3,837,753 3,622,020 3,399,70s 3,170,488 2,934,034 2,689,991 2,437,989 Balance Less: Amortized Financing Costs ( l e4,865) (l 8 I,038) (167,210) (1 53,383) (l 39,555) (12s,728) (r I r,900) Current Portion Long Term Portion 3,642,999 3,440,992 3,232,494 3,017,106 2,794,479 2,564,253 2,326, , , , , , , ,419 3,433,429 3,050,064 2,845,471 2,633,990 2,415,253 2,188,939 t,954,671 CSA Loan 12,989,631 t2,307,951 11,615,594 10,934,828 t0,229,665 9,498,793 Balance Less: (396,t75) (422,012) (447,849) (473,686) (499,524) (s25,361) Amortized Financing Costs 12,593,456 I I,885,939 11,167,745 10,461,142 9,730,141 8,973,432 Current Portion Long Term Portion 1,352,824 1,327,083 1,279,415 1,267,373 1,255,325 1,243,271 11,240, ,558,856 9,888,330 9,193,769 8,474,816 7,730,161 Continued.

106 TREC SOLARSHARE CO-OPERATTVE (NO.l) rnc. NOTES TO THE FINANCIAL STATEMENTS DECEMBER 3I,2OI7 Page COMMUNITY SOLAR BONDS Description: Security: Fair Value of Security: The Co-operative is cunently issuing 3 types of bonds Floating charge against all assets of the Co-operative. Community Bonds stand in first position ahead of Community Power Capital financing. Based on intemal valuations, the Co-operative is obliged to maintain the net present value of future cashflows net of related long term debt, in excess of the face value of the outstanding bonds. Based on internal valuation, estimated net present value at December 31,2017 exceeds outstanding bonds. Bond Type Original Bond CV/CF Bond Long Bond Interest Rate s% 5% 6% Conditions Maturity Outstanding balance, net of redemption Paid semi-annually Compounded arurually on anniversary.bonds held in RRSP/RzuF/TFSA. Principal and Interest payrnents commencing 6 months after issue Pre-2014:5 years after issue date Offering 20l4ll: Oct Offering : April Offering : April Offering :5 years after issue date Offering 20l4ll: Oct 3l 2019 Offering : April3} 2020 Offering : April Offering l.5 years after issue date Offering : April Offering : April Offering :5 years after issue date Holdins Accounts 24,587,000 17,560,000 5,176,118 3,105,259 4,179,471 2,581, The Co-operative has been authorized by the Financial Services Commission of Ontario to offer Community Solar Bonds to the public under a series of sequential Offering Statements as follows: Date of Offering Expiry Total Bonds Issued by Offering Statement (to Dec 3l20l7l } lav Mav i ldav April s0 Mav April ,444,793 Nov 0l 2014 April l s Oct l Oct Oct Oct Aue 201l-Oct20l2 Not receipted, co-op exemption 156,000 Continued.

107 TREC SOLARSHARE CO-OPERATTVE (NO.r) rnc. NOTES TO THE FINANCIAL STATEMENTS DECEMBEF.3I,2OIT Page COMMUNITY SOLAR BONDS (Continued) Prior to Oct 2012 the Co-operative was issuing bonds without a receipted offering statement, under the Co-operative exemption (limit of $1,000/member/year). 10. EEDI AND GT LIMITED PARTNERSHIP In 2016, the Co-operative entered into an agreement to provide credit to a Limited Partnership of which they are not a partner in order to develop a set of projects at an agreed upon cost. Under this agreement and as per each project's Asset Purchase Agreement, the borrorwer agrees to sell each project to the Lender or an affiliate of the Lender. During the year, the Co-operative advanced amounts to the Limited Partnership to finance the development of 8 projects. As of the year end, 7 projects had reached COD and were recognized as assets of the Co-operative pending legal purchase in I project remained in development and $I,542,879 represents the amount advanced as a loan to the borrower on this project as of December 3I DEVELOPER LOANS Developer Loan Type Description Solera Sustainable Energies Companies Ltd. Deferred payment This defened payment is payable to Solera Sustainable Energies Company Limited. Maximum of $341,915 Interest Rate: Calculated as per the agreement Term: Repayment: Security: 11 years from October27,2015 Commencing on the fifth anniversary of the agreement. Annual pa rments based on terms of the agreement None Morgan Solar Holdback on Invoices Payable An amount retained from payment due to Lender to provide security against a Limited Product Warranty. In the event the Lender defaults on its olbigations under the terms of the warranty, SolarShare can reduce the principal repayment of the loan and rectifu the default. 5.5%oper annual from the Advance date (Sept ) 10 years commencing Sept 30,2017 Annual repayments of $10, CAD principal plus interest for the period on the anniversary date of the advance. None. Continued.

108 TREC SOLARSHARE CO-OPERATTVE (NO.l) rnc. NOTES TO THE FINANCIAL STATEMENTS DECEMBER 3 1, Page INVESTMENT IN JOINT VENTURE The Co-operative has entered into a Joint Venture agreement to operate two of the projects located on commsrcial rooftops in Brampton. Investment in the Joint Venture is accounted for as follows: Joint Venture Accountins Total Assets $220.2s4 $ 1 8s.1 70 Total Liabilities s $ Net Assets $11s.308 s SolarShare Interest in JV at 50.9o/o $s8,691 $ Partner Interest In JV at 49,1o/o $56,617 $48, CEPP GRANT The Co-operative recorded a grant from the IESO - Community Energy Partnerships Program in the 2015 and 2014 ftscal years. The 2016 revenue from the grant is the final reconciliation of costs covered by the grant and the final installment of funding received related to project development in the fiscal years. Continued..

109 TREC SOLARSHARE CO-OPERATIVE (NO.l) rnc. NOTES TO THE FINANCIAL STATEMENTS DECEMBER3T,2OIT Page FINANCIAL INSTRUMENTS The Co-operative is exposed to various risks through its financial instruments. The following presents the Co-operative's exposures to risk at December 31, Risk Management The Co-operative manages its exposure to risks associated with financial instruments by not dealing in any financial instruments that will have a detrimental effect upon its operating or financial performance. The objective is to avoid exposure to the risks. Liquidify Risk Liquidity risk is the risk that the Co-operative will not be able to meet a demand for cash or fund its obligations as they come due. Liquidity risk also includes the risk of the Cooperative not being able to liquidate assets in a timely manner at a reasonable price. The Co-operative meets its liquidity requirements by preparing and monitoring detailed forecasts of cashflows from obligations, anticipating investing and financing activities, and holding assets that canbe readily converted into cash. Credit Risk The Co-operative's credit risk exists with the local distribution companies (LDC). See appendix 1 for LDCs by project Interest Rate Risk The has the investments that earn interest income: Item Community Solar Assets 2 Description Debt Service Coverase Invested with HSBC Investment GIC Term 90 davs startine December Rate 1.62% per year Principal $67s.000 The Co-operative also has loan obligations that carry interest. The CPC loan payable carry rates of interest between 60/o and l0o/o and bonds payable carry arl interest rate of 5%-6%. Interest rates on future bond offerings may vary from rates stated here. Fair Value The fair values of cash, accounts receivable and accounts payable are approximately equal to their carrying value due to their short term nature. The fair value of notes payable is determined using the present value of future cash flows under current financing agreements, based on market interest rates for loans with similar conditions and maturities. Continued.

110 TREC SOLARSHARE CO-OPERATTVE (NO.l) INC. NOTES TO THE FINANCIAL STATEMENTS DECEMBER3I,2OI] Page FINANCIALINSTRUMENTS(Continued) Change in Risk There has been no significant change in the Co-operative's risk exposure from the prior year. 15. CONTRACTUAL OBLIGATIONS TfuEC Renewable Energy Fund The Co-operative has entered into an agreement with TREC to transfer all accounting surplus after allowances for cash flow needs and required maintenance reserves (at the board's discretion) to a Renewable Energy Fund managed by TREC. Transfers to the fund are subject to the terms and conditions in the agreement. The funds will be reinvested in approved community power projects. TREC Services The Co-operative has entered into an agreement where TREC will provide some backoffice services for the co-op according to agreed upon schedules. This Agency Agreement is effective August I"t 2017 for a term of 8 months, updated from an agreement in July Services and Fees to be reviewed annually on March l't going forward. C o mmunity We alth C o -operatív e The Co-operative has an agreement with Community ÏVealth to transferto therrt25yo of the surplus resulting from the operations of the eight projects which SolarShare took over from the Green Timiskaming Co-operative. The surplus is to be calculated by SolarShare at the end of the 20 year operation agreements on these projects. 16. LEASE COMMITMENTS The Co-operative is committed to 2O-year lease agreements on each of the properties where it has energy assets located. Future lease obligations are estimated to be as follows: Lease Commitments Operational Proiects 4r2.r90 4r t , Total 412,190 4r2, , " ,690 Continued...

111 TREC SOLARSHARE CO-OPERATTVE (NO.l) INC NOTES TO THE FINANCIAL STATEMENTS DECEMBEF.3T,2OTT Page LEASE COMMITMENTS (Continued) A portion of lease payments (SunFields, Champion, and Earlton) are based on a percentage (l0o/o, l}o/o,and 7.5%) of gross rsvenue eamed by those projects. Future amounts of these are not estimateable at this point and are not included above. Some projects have pre-paid20 year leases. These amounts are not included in the future lease obligations above. 17. PROJECTDEVELOPMENTCOMMITMENTS The Co-operative is committed to agreements with a number of developers to develop or acquire projects across Ontario with estimated costs as outlined in Appendix 1. Dewey - New Construction Claremont - Operational Project 18. DONATED PROPERTY AND SERVICES During the year, substantial amounts of voluntary services were provided. Because these services are not normally purchased by the Co-operative and because of the difficulty of determining their fair value, donated services are not recognized in these statements. Continued.

112 TREC SOLARSHARE CO-OPERATTVE (NO.l) rnc. NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31,20I7 Page RELATED PARTY TRANSACTIONS Related Party Transactions TREC Renewable Energy Cooperative Community Power Capital Iler Campbell LLP Ambrose Raftis DLS Robertson Professional Corporation Relationship Transaction Under the terms of an Agency Agreement, TREC was engaged to provide the following services Services fees for: Co-op Mgmnt Mgmnt of CPC Asset Mgmnt Finance Mgmnt Investment Mgmnt HrMemnt $217,987 $0 89,426 s24,759 $95,277 $40,618 s235,967 $58,694 $19,611 s22,464 s93, ,934 sr3,444 $9,000 Sublet s $30,1s0 Grid Note Interest Paid $1,021,72r $896,649 One of the partners of the legal firm is a director SolarShare Director The owner of the accounting consulting firm is a director Legal Fees Paid $65,615 $67,130 Snow Removal 51,245 $0 Accounting Services $12,938 $ 10,926 Continued.

113 TREC SOLARSHARE CO-OPERATIVE (NO.l) INC. NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31,2017 Page2l 20. SUBSEQUENT EVENTS 1. Subsequent to the year end the Co-operative acquired or will acquire ownership of 13 projects, 10 of which have been recognized as assets of the Co-operative at year end. 2.The final I of the 11 projects achieved COD as of January 22,2018. Continued.

114 TREC SOLARSHARE CO-OPERATTVE (NO.l) rnc. NOTES TO THE, FINANCIAL STATEMENTS - APPENDIX 1 DECEMBER 31,2OI7 Page22 Description Size (DC) l cation Comerical Operation Date Local Disrtibution Company Pre-COD Interest Equipment Costs Project Cosß Amortiation to Dec Total Capital Assets ^(\').a7 6,882, ,088 Sunfìelds l7 Groundmount PV Tracken 204kW (17x12kw) Across southern Ontario March 6-Sept HydroONE 57,674 1,726,840 r4t,23t TREC SolarShare Co-op (No.l) Inc. Wrteruiew Panjetan Rooftop Anzy 438kW Mississauga Nov I Alectra 159,799 1,899, ,596 Roofrop Array 162kV/ GTA Atg PowerSheam 4, ,381 39,535 Earlton Rooftop Amy 250kw Timiskaming Ãu Hydro One , ,726 Joint Venture 111 Vankirk 153 Vankirk Rooftop Anays 1200kw (600 ) GTA May , Apr l Alecta 57,264 1,918, ,010 Under Development Dewey GrounÍnount 25Okw Kingston Early Hydro One t49 t0,276 Entering PA Claremont Rooftop Arrays l00kw Pickering 2017 Veridian 1,683 Under Development Blackburn 1 Gromtnount 600k!'V Timiskaming Area Dec Hydro One 122,391 10,031 Description Size (DC) l câtion Commerical Operation Date Local Disrtibution Company Pre-COD Interest Equipnent Costs Project Costs Amortizâtion to Dec Balence es et Dec Total ó ,819, ,072 (1,326,320\ s.044,237 Ontario St Rooftop Array l40kv/ St Catherines Nov Alectra 745,081 54,756 ( \ ODêrâtional Droiects Community Solar Assets I Ltd Champion Michael Street RooftopArray RooftopAray 249kW Moose Creek July HydroONE 27 t,484,566 69,539 ( \.t l50kw Ottawa Sept Hydm Ottawa 16, ,455 58,415 Q GoodMark Rooftop Array l34kw GTA Nov Toronto Hydro E.S. 8, , ,960 ( \ \ Venâstra RooftopAmy 366kV/ Vanastra March HydroONE 39,825 2,188,057 97,402 ø26.302), 1 _ßSß 9ß2 Description Size (DC) I cation Comerical Operation Date local Disrtibution Company Pre-COD Interest Equipment Costs Project Coss Amortiation to Dec Balance as at Dec Totål Summerville Roofrop Array 300klv GTA October 2014 Alectra 24,662 t,188,755 2s,212 Holtby Rooftop Array 600kw GTA October 2014 Alecnz 55,679 2,M6,806 49,818 Ooerational Proíects E0 VanKirk Rooftop Array 600kw GTA March2T-2015 Alectra 48,120 2,825,309 44,465 Community Solar Assets 2 Ltd Midair Roofrop Array 600kw GTA April Alectra 63,231 3,303,496 55,684 Kæle Rooftop Aray 300kw GTA May Alectra 4l,833 1,107, ,1 35 Basaltic Rooftop Array 300kw GTA February 20-20i5 Alecna 20,623 I,080, ,709 Abeline Rooftop Anay 550kw GTA July Alecü'a ,1 I 1,054 23,006 Stronach Rooftop Array 500kw GTA Sept Alectra ,322,101 16,431 Orenda Rooftop Anay 320kv/ GTA Oct Alecra 6,436 1,251,446 ( ) (196,937) (405,806) (402,889) (460,156) (220,128) (171,728) (389,793) (87,706) (143,1 18) ^ ,462-7AA ,1 8 I Continued.

115 TREC SOLARSHARE CO-OPERATTVE (NO.l) INC. NOTES TO THE FINANCIAL STATEMENTS - APPENDIX 1 DECEMBER 31,2017 Page23 Description Size (DC) - estimated l cation Commerical Operating Date Local Distribution Company Pre-COD lnterest Equipment Coss Project Costs Amortiztion to Dec Total ( ) Rooftop Aray 60Okw Kingston Jvt72017 Lovell Abbey Dawn Kaladar Blackburn 1 Bleckburn 2 5,392 2,210,410 49,647 (56,874) Ground Mount 500kw Kingston Jw ,331,928 30,419 (59,343) Grcud Mount 25Okw Kingston Jun ,600 1,095,452 16,524 (27,839) Ground Mount 600kv/ Timiskaming Jan l HydroOne 1,3 t0 Ground Mount 60Okw Timiskaming Dec HydroOne (13,297) 2,292,924 10,033 Solar Assets 4 Ltd Packham Ground Mount 60Okw Timiskaming Oct HydroOne 5,202 2,308,239 10,824 (19,532) Genmit Ground Mount 600kv/ Timiskaning Aug3l-2017 HydroOne 8,729 2,330,406 10,824 (39, r 66) Pope Ground Mount 60okw Timiskaming Sept HydroOne 4,921 2,279,198 10,824 (28,807) Gromd Mount ó00kw Timiskaming Sept HydroOne 7,731 2,279,257 10,824 (28,835) Milks Blackburn 3 Ground Momt 600kv/ Timiskaming Aug Hydroone 8, ,487 11,220 (38,390) Craig Ground Mount 600k'ù/ Timiskaming Aug HydroOne 8,697 2,283,587 10,824 (38,385) Pre-COD Interest Equipment Costs Project Costs Amortization to Dec Balance of Capital Assets Dec Consolideted Operational PendingCOD UnderConstruction Assets within LPs Consolidated Total 63s,233 50,116,694 1,960,M7 ( ) 1,3 l0 122,540 20,307 57,264 1,918, ,010 Q80.294\ 815,037 52,036,419 2,089, U s

116 Schedule G Consent Letter from the Auditor 115

117 37 Main Street Toronto, Ontario M4E 2V5 KRIENS-LAROSE. LU' CHARTl:.R.J.::LJ PROFESSIONAL ACCOUNTANTS Tel Fax Web Page: Dear Sirs: Licensing & Enforcement Division Financial Securities Commission of Ontario Box Yonge Street North York, Ontario M2N 6L9 Re: TREC Solarshare Co-operative (No. I) We refer to the offering statement of TREC Solarshare Co-operative (No. I) dated May 17, 2018 relating to the sale and issue of Community Bonds. We consent to being named and to the use in the above-mentioned Offering Statement, of our report dated April 27, 2018 to the members of the Co-operative on the following financial statements: Statements of financial position as at December 31, 2017 and 2016; Statements of cash flows for the years ended December 31, 2017 and 2016 and a summary of significant accounting policies and other significant explanatory infonnation We report that we have read the Offering Statement and all information therein and have no reason to believe that there are any misrepresentations in the information contained therein that are derived from the financial statements upon which we have reported or that are within our knowledge as a result of our audit of such financial statements. We have complied with Canadian generally accepted standards for an auditor's consent to the use of a report of the auditor included in an offering document, (Sec 7150 CPA Handbook) which does not constitute an audit or review of the prospectus as these terms are described in the CPA Handbook - Assurance. Kriens~LaRose LLP Licensed Public Accountants Chartered Professional Accountants Toronto, Ontario May 23,

118 Schedule H Certificate of Incorporation 117

119 Schedule I Certificate and Articles of Amalgamation 118

120 119

121 Schedule J Terms of Renewable Energy Fund Agreement 1. Definitions The following terms shall have the meanings set out below: Solar Bonds mean those bonds issued by SolarShare to its members for the purpose of raising the capital required for its renewable energy projects. Investment Committee means the committee that decides which projects the monies from the Surplus Fund will be invested in, as described in paragraphs 2 and 3. Renewable Energy Project means any project for the generation of renewable energy undertaken by SolarShare, as approved by the Investment Committee. Accounting Surplus means any surplus that SolarShare accumulates as calculated using generally accepted accounting principles for not for profits. Renewable Energy Fund means the fund that has been created from the surpluses of SolarShare, and any other organization, and is dedicated to investing in the development of renewable energy projects. Surplus Mortgage means the mortgage securing SolarShare s obligations under this Agreement against the real and personal property of the SolarShare, referred to in paragraph TREC s Obligations TREC agrees that the Renewable Energy Fund will only be applied to projects that have been approved by the Investment Committee TREC agrees that an agent of SolarShare will have at a minimum at least one permanent seat on the Investment Committee, and up to 50% of the seats on the Investment Committee if and when SolarShare s contribution to the fund is 50% or greater than the total fund amount. Committee seats will be redistributed annually, based on the proportion of investment from the participating co-ops. TREC agrees that 100% of the sums received by it from SolarShare pursuant to paragraph 3 shall be allocated to: Acquiring and/or developing renewable energy projects and to use for educational programming TREC shall provide annually and upon request, information as to loans requested by other cooperatives, projects approved, money available for such purpose, and projected cash flows, in order that SolarShare may plan its capital needs in full knowledge of the amounts and timing of financial support from TREC. TREC shall maintain the books and records related to the Renewable Energy Fund in a form satisfactory to SolarShare and shall permit representatives of SolarShare to have access for inspection of such books and records at all reasonable times. TREC agrees to postpone its security to any 120

122 bona fide arm's length third party loan entered into by SolarShare for the purpose of providing financing for the development and construction of a Renewable Energy Project, and security for the repayment of Solar Bonds issued by the SolarShare to its members. 3. SolarShare s Obligations SolarShare shall at all times remain a non-profit co-operative incorporated under the Cooperative Corporations Act (Ontario) whose membership is comprised primarily of those persons who have purchased Community Solar Bonds from SolarShare. SolarShare shall record its accounting surplus annually as a liability to TREC to be placed into the Renewable Energy Fund. That liability shall be paid out to TREC in cash after the following items: SolarShare shall retain enough cash in its accounts to support its reasonable working capital needs SolarShare shall retain sufficient cash in its accounts to pay down member loans and/or bank debt as it deems necessary SolarShare shall retain sufficient cash to retire member solar bonds as it deems necessary All residual cash shall be paid to TREC to be placed in the Renewable Energy Fund as settlement of the liability. Any accounting losses shall serve to reduce the liability referred to above. SolarShare shall forthwith upon acquisition of a Renewable Energy Project site charge the Land as security for the performance of its obligations under this Agreement by delivering and registering a charge on the title to the site in favour of TREC, in form satisfactory to TREC, subordinated to the Solar Bondholders. 4. General Any notice, direction or other instrument required or permitted to be given by either party under this Agreement shall be in writing and shall be sufficiently given if delivered personally, sent by prepaid first-class mail or transmitted by telecopy or other form of electronic communication during the transmission of which no indication of failure of receipt is communicated to the sender: Any such notice or other communication delivered personally or by facsimile machine shall be deemed to have been given and received on the date of delivery provided that if such day is not a working day, such notice or other communication shall be deemed to have been given and received on the next following working day. Notice shall be given as follows: SOLARSHARE 401 Richmond St, Suite 240 Toronto Ontario M5A 1T7 Attention: Michael Brigham, President 121

123 Telephone: TREC 401 Richmond St, Suite 240 Toronto Ontario M5A 1T7 Attention: David Cork, Executive Director Telephone: No waiver or neglect to enforce any right or remedy in respect of any breach of any covenant or agreement contained in this Agreement shall be deemed to be a waiver of any subsequent breach of the same or any covenant or agreement contained in this Agreement. This Agreement shall endure to the benefit of and be binding upon the parties to this Agreement and their respective successors and permitted assigns. This Agreement may not be assigned without the consent of the other party to this Agreement. This Agreement shall be construed in accordance with the laws of the Province of Ontario. The terms of this Agreement are intended by the parties as a final expression of their agreement and may not be contradicted by evidence of any prior or contemporaneous agreement. This Agreement constitutes the complete and exclusive statement of its terms. If any provision of this Agreement, or its application to any person or in any circumstances, shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such a provision to persons or in circumstances other than those as to, or in which, it is invalid or unenforceable, shall not be affected thereby, and each provision of this Agreement shall be valid and be enforced to the full extent permitted by law. Neither party has made any representations or warranties with respect to the subject matter of this Agreement, except as expressly set forth in this Agreement. Nothing in this Agreement shall be construed to constitute either of the parties, a partner, agent or representative of the other or to create any commercial or other partnership between the parties. This Agreement shall operate and remain in full force and effect from and after the date of this Agreement and for so long as there is a loan or other contract remaining in force between the parties. The parties shall execute such further and other documents and assurances as may be necessary to further the intent of this Agreement. 122

124 Schedule K Board and Committees Roles and Responsibilities Board and Committee Roles and Responsibilities SolarShare Board The role of the Board is to supervise the management of SolarShare s business and affairs to fulfill the mission. The Board is generally not responsible for the day-to-day management and operation of the SolarShare s business, as this responsibility has been delegated to management; however, board members may contribute to operational roles as needed. Management s role is to conduct the day-to-day operations in a way that is consistent with the strategic priorities and by-laws approved by the Board. The Board is responsible for supervising management in carrying out this responsibility. The directors of the Board, in exercising their powers and discharging their duties, shall act honestly and in good faith with a view to the best interests of SolarShare and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. The Board discharges some of its responsibilities directly and discharges others through Committees. The Board may assign to any Committee the prior review of any issues the Board is responsible for. Committee recommendations are subject to Board approval. The Board is to be informed of any Committee recommendations at the regular Board meeting next following such decision. As part of its stewardship responsibility, the Board advises management on significant business issues and has the scope of responsibilities outlined in the table below; however, board members may play a more involved role in the day to day operations of SolarShare. Scope Members Meeting Frequency Support the development of mission, bylaws and strategic plan Understand and address organizational risks and evaluate performance Secure and ensure effective ongoing senior management Maintain effective partnerships, reporting and communication Chair: Rotating Members: Mike Brigham (President), David Robertson (Treasurer), Brian Iler (Secretary), Alison Goudy, Richard Sung, Julie Leach, Ambrose Raftis, Shama Ahmed, Pieter De Koning Monthly, plus AGM and Strategic Planning Session 5 hours per month, 4 hours per AGM and 8 hours for Strategic Planning 123

125 SolarShare Committees Scope o Board will establish standing or ad-hoc committees to address issues that are too complex and/or numerous to be handled by the entire board o Minimize number of committees and deploy only as necessary o Carefully define purpose and scope of each committee Communication and administrative support o Staff will organize agenda and materials with committee chair prior to each meeting and take meeting minutes o Committee meeting minutes, agendas and materials stored on shared drive o Report from committee chair to board and bring specific items for motion or information Committee members o Term length 3 years o Must be members of SolarShare o Committees nominate and Board appoints committee members and chairs o Committees should endeavor to have more than one non-board member Committee Scope Members Meeting Frequency Finance & Budget (Standing) Oversees development of the budget Ensures accurate financial tracking, monitoring, accountability Reviews bond sales and interest, long term debt and associated terms Supports development of offering statements, valuation and other financial matters Chair: David Robertson Members: Mike Brigham, Thomas Haubenreisser Monthly, and as required 3 hours per month Product offering review and development (with Marketing Committee) 124

126 Committee Scope Members Meeting Frequency Governance (Standing) Develops and applies guidelines for conflict of interest, ensuring ethical behavior and resolving ethical conflicts Guides development, review and authorization of board, committee and personnel policies, procedures and disclosure Nominates, assesses and orients board and committee members Chair: Julie Leach Members: Mike Brigham, Thomas Haubenreisser, Shama Ahmed Quarterly, and as required 2 hours per month Oversight related to compensation to board members for any reason, either individually or through a corporation they work for Marketing & Communications (Standing) Oversees development and implementation of the Marketing Plan Guides sales, membership engagement, and marketing Represents the organization to the community and the media Plans and coordinates marketing, board and member activities and events Chair: Joel Longland Members: Julie Leach, Thomas Haubenreisser, Doug Finley, Pieter De Koning Monthly, and as required 2 hours per month Product offering review and development (with Finance & Budget Committee) New Business Model & Acquisitions (Standing) Identify new business opportunities for investigation Guide research into options for new business models Assess business partnership, amalgamation and purchase opportunities Chair: Mike Brigham Members: Alison Goudy, Richard Sung Monthly, and as required 3 hours per month Investment review and vetting Assessing the risk of new business models as related to investment product offering (with Finance & Budget Committee) 125

127 Committee Scope Members Meeting Frequency Audit Committee (Standing) Oversight of the independence, qualifications and approval of external auditors Integrity of financial statements Facilitate and guide annual financial audit Responsible for management of financial systems and internal controls Chair: David Robertson Members: Thomas Haubenreisser As required 3 hours per meeting 126

128 Governance Committee Background and Context In just seven years, SolarShare has become Ontario's largest renewable energy co-operative. Its existence and current success is in large part dependent upon related third parties such as TREC and Community Power Capital (CPC), as well as committed board members who have donated their professional expertise and collectively volunteered thousands of hours. SolarShare has also engaged professional firms in the course of its business. As a result, over 1,100 SolarShare members participate and benefit from community owned solar installations. Several of SolarShare's board of directors have an affiliation with these third parties and are directly or indirectly compensated for their professional service. They may also receive financial returns on their investment in CPC, a construction financing entity for SolarShare. SolarShare's relationship with these third parties and its directors is profiled in SolarShare's Offering Statement, which is approved annually by the Financial Services Commission of Ontario (FSCO). Governance Committee To maintain the highest standards of corporate governance, SolarShare has established a Governance Committee. Policy of the SolarShare's Board of Directors on Governance The SolarShare board of directors believes that it is important to disclose all related interactions between SolarShare and its directors and has developed practices that promote good corporate governance while ensuring that the co-op achieves its mission. This will be accomplished through the Governance Committee. The purpose of the Committee is to provide overall governance oversight related to: Compensation to board members, for any reason, either individually or through a corporation they work for; Issues of conflict of interest; Overall governance policies and disclosure. The committee will meet on a quarterly basis or ad hoc as needed. The committee will propose policies and practices to deal with governance related issues and will also monitor and document any financial interactions between SolarShare and its board members. The committee will consist of roughly 5-7 members, as many as possible of whom are financially independent from the co-op other than being co-op members and bondholders. Meeting minutes as well as any governance recommendations made by the committee will be documented and shared with SolarShare's board. The attached table profiles board members affiliations and related party transactions. The Governance Committee will update this table annually with each Offering Statement renewal. 127

129 Schedule L - SolarShare Members As of April 30, 2018, SolarShare has a diverse membership comprised of more than 1,600 individuals and institutions who have invested over $37 million in Solar Bonds, earning $3.3 million in interest. SolarShare members advocating for renewable energy. 20% of our members are under 40 years of age 90% are University educated 80% feel they have the power to create positive change in their community 22% hold their Solar Bonds in a Registered Plan Ontario residents and institutions invest in SolarShare seeking to: Generate a financial return, 48% Make an impact investment, 20% Improve our environment, 32% 128

130 Schedule M - SolarShare Project Descriptions PROJECT NAME CAPACITY (kw DC) STA TUS LOCATION PANELS INVERTERS DEVELOPER IMAGE SOLARSHARE SunFields (17 sites) 204 Ope ratio nal Manitoulin Island & North Huron County REC PE Series SMA Sunny Boy AGT Waterview 438 Ope ratio nal Mississauga UniSolar Powertilt Satcon PowerGate AE, (4x80 kw) AGT Panjetan 130 Ope ratio nal Markham Canadia n Solar 255W Polycryst aline AE 3TL -16 and -23 Ontario Solar Provider 129

131 PROJECT NAME CAPACITY (kw DC) STA TUS LOCATION PANELS INVERTERS DEVELOPER IMAGE Earlton Arena 300 Ope ratio nal Earlton Flextroni cs 330W poly Fronius Symo 24kW (x10) (& 10kW) Endura Energy Development s Inc. JOINT VENTURE 111 Van Kirk 600 Ope ratio nal Brampton Canadia n Solar 265W Monocry staline Advanced Energy 500TX Endura Energy 153 Van Kirk 600 Ope ratio nal Brampton Canadia n Solar 265W Polycryst aline Advanced Energy 500TX Endura Energy CSA1 130

132 PROJECT NAME CAPACITY (kw DC) STA TUS LOCATION PANELS INVERTERS DEVELOPER IMAGE Ontario Street 140 Ope ratio nal St. Catherines Canadia n Solar CS6P Advanced Energy 100TX Moose Power/AGT Goodmark 133 Ope ratio nal Toronto Panasoni c SCI Series 60M Advanced Energy 100TX RESCO Michael Street 150 Ope ratio nal Ottawa Canadia n Solar CS6P Advanced Energy 100TX Endura Energy 131

133 PROJECT NAME CAPACITY (kw DC) STA TUS LOCATION PANELS INVERTERS DEVELOPER IMAGE Champion Mushroom 249 Ope ratio nal Moose Creek Canadia n Solar CS6P Kako XP10 (x20) Ontario Solar Provider Vanastra 366 Ope ratio nal Clinton Panasoni c 320W Advanced Energy 250TX Eclipsal CSA2 Summerville 300 Ope ratio nal Mississauga Canadia n Solar 260W Polycryst aline Advanced Energy 250TX Endura 132

134 PROJECT NAME CAPACITY (kw DC) STA TUS LOCATION PANELS INVERTERS DEVELOPER IMAGE 80 Van Kirk 600 Ope ratio nal Brampton Canadia n Solar 255W Polycryst aline Advanced Energy 500TX Endura Holtby 600 Ope ratio nal Brampton Canadia n Solar 260W Polycryst aline Advanced Energy 20kW string (x25) Endura Energy Midair 600 Ope ratio nal Brampton Trina Solar 255W poly Advanced Energy 500TX Endura Energy 133

135 PROJECT NAME CAPACITY (kw DC) STA TUS LOCATION PANELS INVERTERS DEVELOPER IMAGE Keele 300 Ope ratio nal Vaughan Canadia n Solar 250W Polycryst aline Advanced Energy 20kW string (x13) Solera Basaltic 300 Ope ratio nal Vaughan Canadia n Solar 250W Polycryst aline Advanced Energy 20kW string (x13) Solera Orenda 300 Ope ratio nal Brampton Canadia n Solar 250W Polycryst aline Advanced Energy 20kW string (x13) Solera 134

136 PROJECT NAME CAPACITY (kw DC) STA TUS LOCATION PANELS INVERTERS DEVELOPER IMAGE Abilene 600 Ope ratio nal Mississauga Canadia n Solar 260W Polycryst aline Advanced Energy 500TX Endura Energy Stronach 300 Ope ratio nal Aurora Canadia n Solar 260W Polycryst aline Fronius Symo 24kW (x12) (& 20kW) Solera CSA 4 Lovell 600 Ope ratio nal Kingston Flextroni cs 330W poly Fronius Symo 24kW Endura Energy Development s 135

137 PROJECT NAME CAPACITY (kw DC) STA TUS LOCATION PANELS INVERTERS DEVELOPER IMAGE Abbey Dawn 600 Ope ratio nal Kingston Flextroni cs 330W poly Fronius Symo 24kW Endura Energy Development s Kaladar 300 Und er Con struc tion Kaladar Flextroni cs 330W poly Fronius Symo 24kW Endura Energy Development s Sundance Ope ratio nal Timiskamin g Flextroni cs 330W poly Fronius Symo 24kW Endura Energy Development s 136

138 PROJECT NAME CAPACITY (kw DC) STA TUS LOCATION PANELS INVERTERS DEVELOPER IMAGE Sundance Ope ratio nal Timiskamin g Flextroni cs 330W poly Fronius Symo 24kW Endura Energy Development s Sundance Ope ratio nal Timiskamin g Flextroni cs 330W poly Fronius Symo 24kW Endura Energy Development s Sundance Ope ratio nal Timiskamin g Flextroni cs 330W poly Fronius Symo 24kW Endura Energy Development s 137

139 PROJECT NAME CAPACITY (kw DC) STA TUS LOCATION PANELS INVERTERS DEVELOPER IMAGE Sundance Ope ratio nal Timiskamin g Flextroni cs 330W poly Fronius Symo 24kW Endura Energy Development s Sundance Ope ratio nal Timiskamin g Flextroni cs 330W poly Fronius Symo 24kW Endura Energy Development s Sundance Ope ratio nal Timiskamin g Flextroni cs 330W poly Fronius Symo 24kW Endura Energy Development s 138

140 PROJECT NAME CAPACITY (kw DC) STA TUS LOCATION PANELS INVERTERS DEVELOPER IMAGE Sundance Ope ratio nal Timiskamin g Flextroni cs 330W poly Fronius Symo 24kW Endura Energy Development s 139